HOW  TO  DO 


AS  BUSINESS  IS  DONE  IN 


GREAT  COMMERCIAL  CENTERS 


UC-NRLF 


CONTAINING  ALSO 


BATONS  NEW  SHORT-CUTS  IN  FIGURES 


HOW  TO  DO 


BUSINESS 


AS  BUSINESS  IS  DONE 

IN  GREAT 
COMMERCIAL  CENTERS 


BY 

SEYMOUR  EATON 


Director  of  the  Department  of  Industry  and   Finance, 
Drexel  Institute,  Philadelphia. 


Author  of  "  The  New  Arithmetic,"  "One  Hundred  Lessons  in  Business, 
"  Business  Forms,  Customs,  and  Accounts,"  etc. 


P.  W.  ZIEGLER  &  CO. 
PHILADELPHIA 


Copyright.  1896, 

BY 
SEYMOUR  EATON. 


PREFACE. 


The  field  of  business  will  never  be  wholly  occupied.  It  will 
always  offer  large  privilege  and  rich  reward  to  the  right  kind  of 
ability.  It  demands  to-day  the  best  brain  power  of  the  world. 
It  is  commonly  stated,  and  with  some  truth,  that  more  ability 
is  needed  for  the  position  of  president  of  a  great  railway  than 
for  the  position  of  president  of  a  great  nation.  The  same  is  true 
of  other  great  commercial  concerns.  No  other  field  of  action 
offers  to-day  larger  inducements  or  greater  responsibilities ;  no 
other  field  draws  more  largely  upon  the  ranks  of  able  and 
ambitious  young  men.  Modern  business  has  grown  so  complex 
and  its  requirements  are  so  exacting,  that  a  knowledge  of  its 
laws,  customs  and  tend  3ncies  are  necessary,  not  only  to  success, 
but  to  a  comfortable  existence.  The  American  people  are  pre- 
eminently a  business  people.  The  world  is  both  our  harvest 
field  and  our  market.  Under  these  conditions  no  excuse  need 
be  offered  for  the  publication  of  a  business  hand-book.  Its  pur- 
pose is  self-evident. 

SEYMOUR  EATON. 


M289368 


CHAPTERS. 


PAGE 

Banking,  Collections  a,nd  Negotiable  Paper        ...  9 

Stocks,  Bonds  and  Other  Securities           ....  101 

Transportation  of  Mail,  Money  and  Merchandise         .        .  135 

Life,  Fire,  Marine  and  Indemnity  Insurance  .         .         ,  167 

Importing,  Exporting,  Shipping  and  Warehousing      .         .  183 

Supplementary  Notes — Margin  Trading  .         .         .        .  211 
Hints  and  Helps  for  Young  Business  Men  .         .         .         .217 

Letters  Which  Bring  Business,  and  How  to  Write  Them  .  233 

Valuable  Hints  for  Corresponding  Clerks    ....  249 

Slips  in  Grammar  Corrected 260 

How  to  Earn  and  Get  a  Good  Situation       .        .        .        .  265 

Communication  by  Telegraph 269 

New  Short-Cuts  in  Figures 273 

Mechanics'  Arithmetic 293 

Postscript  Notes 301 

Modern  Bookkeeping  Ideas 307 


Banking,  Collections,  and  Negotiable  Paper, 


Ancient    Banking. 

The  antiquity  of  banks  is  very  great.  In  the  Metropolitan 
Museum  of  Art,  in  New  York,  are  Babylonian  tablets  bearing 
distinct  records  of  transactions  in  banking  that  took  place  in  the 
reign  of  Nebuchadnezzar.  The  origin  of  modern  banking  may 
be  traced  to  the  money  dealers  of  Florence,  who  were  in  high 
repute  as  receivers  and  lenders  of  money  in  the  fourteenth  century. 
The  name  bank  is  derived  from  the  Italian  banco,  a  bench,  the 
Jews  in  Lombardy  having  benches  in  the  market  place  for  the 
exchange  of  money.  When  a  banker  failed  his  bench  was 
broken  by  the  populace,  and  from  this  circumstance  we  have 
our  word  bankrupt.  The  business  of  borrowing  and  lending 
money  was  undertaken  first  by  goldsmiths,  although  the  two 
had  no  direct  connection.  In  the  process  of  the  separation  of 
employments,  which  is  characteristic  of  an  advancing  society, 
banking  became  a  business  of  its  own. 

The   Bank   of  England. 

The  Bank  of  England  was  the  fourth  important  national  bank 
founded  in  Europe.  The  Bank  of  Venice  was  the  first  in  date. 
The  Bank  of  England  is  more  than  two  hundred  years  old,  and 
is  to-day  acknowledged  to  be  the  greatest  financial  institution  in 
the  world.  It  had  a  capital  at  commencing  of  six  millions.  The 
building  covers  a  whole  block  bounded  on  the  south  by  the  famous 

9 


10 


BANKING,    COLLECTIONS, 


Threadneedle  Street.  Outside  .it  presents  the  appearance  of  a 
blind  outer  wall  of  a  great  building  without  windows,  and  having 
here  and  there  ornamental  pillars  and  a  few  entrances.  The  plan, 
as  shown  in  our  illustration,  is  a  complex  system  of  light- walls, 


-Account  axt's 
Bank  Sot  e  Office 

J  _     _- 


PLAN  OF  THE  BANK  OF  ENGLAND. 


offices,  court  yards,  etc.,  the  result  of  growth  and  necessity. 
Among  the  curiosities  in  the  bank  library  is  a  million  pound  bank 
note.  Tradition  says,  that  there  have  been  only  four  such  notes 
issued.  Samuel  Rogers,  the  poet,  had  one  framed  and  hung  over 
his  parlor  mantelpiece.  Among  other  curiosities  in  the  bank 


AND  NEGOTIABLE  PAPER. 


library  is  a  note  for  ^25,  which  had  slumbered  unobserved  for 
in  years,  and  was  then  presented  and  paid.  If  compound  interest 
had  been  payable  by  the  bank,  the  owner  could  have  claimed  over 
;£6o,ooo.  About  50,000  notes  of  different  values  are  paid  into  the 
bank  every  day.  These  are  kept  five  years  in  the  bank  cellars 
and  are  then  destroyed  by  burning.  New  notes  are  always  given 
out  in  payment  of  bills  and  checks.  The  first  bank  founded  in 
America  was  the  Bank  of  North  America,  in  Philadelphia,  which 
was  established  in  1782. 

The    Value    to    Business    Men    of  Banks. 

Banks  are  absolutely  necessary  to  the  success  of  modern 
commercial  enterprises.  They  provide  a  place  for  the  safe-keeping 
of  money  and  securities,  and  they  make  the  payment  of  bills  much 
more  convenient  than  if  currency  instead  of  checks  were  the  more 
largely  used.  But  the  great  advantage  of  a  banking  institution  to 
a  business  man  is  the  opportunity  it  affords  him  of  borrowing 
money,  of  securing  the  cash  for  the  carrying  on  of  his  business, 
while  his  own  capital  is  locked  up  in  merchandise  or  in  the  hands 
of  his  debtors.  Another  and  important  advantage  is  to  be  found 
in  the  facilities  afforded  by  banks  for  the  collection  of  checks, 
notes,  and  drafts. 

Currency. 

The  legal  medium  of  exchange  of  a  country  is  called  its  cur- 
rency, that  which  passes  current,  or  circulates  as  money,  such  as 
coin  and  bills.  Bullion  is  uncoined  gold  or  silver.  More  than 
ninety  per  cent,  of  the  cash  circulation  of  the  country  is  repre- 
sented by  checks,  etc.  ,  and  not  by  actual  money. 

Opening   a   Bank   Account. 

When  you  enter  a  bank  to  open  an  account,  inquire  for  the 
cashier,  and,  if  convenient,  take  with  you  some  one  who  can 
introduce  you  and  identify  you  as  the  person  you  profess  to  be. 
If  you  go  alone,  do  not  feel  hurt  if  a  number  of  questions  are  asked 
you.  While  you  may  be  perfectly  honest,  a  large  number  of 
people  make  their  living  by  being  sharp,  and,  besides,  it  is  neces- 
sary to  establish  those  confidental  relations  which  ought  to  exist  in 
all  financial  transactions,  so  that  the  cashier  may  know  something 
more  about  you  than  he  could  ascertain  by  merely  looking  at  you, 


12 


BANKING,    COU,ECTIONS, 


DEPOSITED    IN 


The  Union  Trust  Company, 

715,  717  &  719  Chestnut  St.,  Philadelphia. 


DOLLARS. 


Bank  Notes, 

Small  Notes,  1's  and  2's, 
Coin,       .       .  V.       .     . 
Check,  (ENTKE  SINGLY) 

If  in  the  city,  name  of  bank  :  U  oat  of 
the  city,  name  qf  place  where  payable. 


37 

.  a 


tbctt  Cfu^Jju. 
0~**,  A* 


10 


Total, 


era 


and  taking  your  name  on  a  book.  The  cashier  will  have  yoti 
place  your  signature  in  a  book.  Your  name  as  written  in  this 
book  should  be  the  same  in  style  as  you  intend  to  place  on  your 
checks.  If  necessary,  the  cashier  or  some  officer  of  the  bank,  will 
show  you  how  to  make  out  a  deposit  slip.  He  will  give  you  also 
a  small  bank  book, 
in  which  you  will  be 
credited  with  the 
amount  of  money 
which  you  deposit. 
Each  time  you  deposit 
money  you  will  be 
required  to  make  out 
a  deposit  slip.  The 
banks  furnish  the 
printed  blanks  free. 
Under  the  word  checks 
on  the  blank  you  write 
the  names  of  the 
banks  upon  which  the 
checks,  if  any,  which 
you  are  depositing, 
are  drawn.  If  a  check 
is  on  a  distant  city, 
the  name  of  the  city 
should  be  given.  Your 
bank  book  is  in  reality 
your  only  receipt  from 
the  bank  for  the  money 
you  deposit.  When 
you  deposit  money 
hand  it  to  the  receiv- 
ing teller,  and  when 
you  wish  to  draw  money  present  your  check  to  the  paying 
teller.  When  you  wish  to  have  your  bank  book  balanced  hand  it 
to  the  receiving  teller.  This  is  usually  done  on  the  first  of  each 
month.  The  paid  or  cancelled  checks  are  returned  to  you  in  a  day 
or  two  when  you  get  your  bank  book  back.  These  should  all  be 
filed  in  an  orderly  way.  They  serve  as  vouchers  and  may  be 
useful  in  legal  complications. 


TO 

*7 


33 


Z3L 


AND  NEGOTIABLE  PAPER. 


The   Officers   of  a   Bank.  * 

The  directors  of  a  bank  meet  regularly  to  consider  the  char- 
acter of  the  paper  offered  for  discount,  and  to  consult  regarding  the 
general  business  of  the  bank.  Sometimes  the  directors  give  the 
president  or  cashier  authority  to  pass  upon  paper  offered  for 
discount.  The  ordinary  officers  of  a  bank  are  the  president,  who 
is  the  chief  executive  officer  ;  the  cashier,  who  is  the  manager  of 
the  internal  workings  of  the  bank  ;  the  paying  teller,  who  pays 
out  all  moneys  and  has  charge  of  the  working  cash  of  the  bank  ; 
he  is  familiar  with  the  signature  of  each  depositor  and  with  his 
daily  balance,  and  is  really  one  of  the  most  important  officers  of 
the  bank.  The  paying  teller  should  be  a  man  of  good  ability,  a 
man  who  can  read  motives  from  appearances,  a  man  of  quick  and 
accurate  judgment,  and  withal,  a  man  of  patience  and  unwavering 
good  nature.  The  receiving  teller  receives  all  moneys  coming  into 
the  bank,  and  makes  the  entries  in  the  depositors'  pass  books. 
The  note  clerk  has  charge  of  the  commercial  paper  handled.  The 
book-keeper  and  his  assistants  have  charge  of  the  ledgers  and  other 
account  books. 

Suggestions   to    Bank    Clerks. 

Ability,  enthusiasm,  tact  and  determination  are  as  necessary 
in  banking  as  in  any  other  commercial  situations.  Many  of  the 
most  successful  bankers  in  the  country  commenced  as  messengers 
and  passed  from  one  office  to  another  until  they  became  presidents. 
It  should  be  the  constant  endeavor  of  officers  of  a  bank  who  hold 
superior  positions  to  cultivate  and  develop  the  self-respect  of  their 
subordinates.  Faithful  service  and  manly  character  in  a  janitor 
are  entitled  to  just  as  much  honor  and  to  as  full  recognition  as 
that  rendered  by  a  cashier.  The  man  makes  the  place,  not  the 
place  the  man.  It  is  the  general  opinion  of  bankers  that  the 
demand  for  the  right  sort  of  bank-clerk  is  much  in  excess  of  the 
supply.  No  young  man  should  think  of  entering  upon  banking 
as  a  profession  who  has  not  a  real  love  for  the  business.  The  best 
position  for  a  young  man,  and  the  one  affording  the  largest  oppor- 
tunity for  promotion  will  be  that  of  general  assistant.  It  is  con- 
sidered better  to  enter  upon  a  clerkship  in  a  small  bank  than 
in  a  very  large  one,  for  the  reason  that  the  steps  in  the  ladder  of 
success  are  fewer  and  closer.  The  successful  clerk  must  have  a 


14  BANKING,  COLLECTIONS, 

true  appreciation  of  the  value  of  time.  Kvery  minute  should  be 
strictly  given  to  the  work  of  the  bank.  In  the  matter  of  prompt- 
ness the  higher  officers  should  set  a  good  example  for  those  in 
subordinate  positions.  There  are  exceptions,  but  as  a  rule,  pro- 
motions are  not  the  result  of  chance.  The  man  in  any  calling 
who  has  the  ability  and  the  desire  to  do  greater  things  will  sooner 
or  later  be  called  upon  to  do  them. 

Bank   Checks. 

A  check  is  an  order  for  money,  drawn  by  one  who  has  funds 
in  the  bank,  payable  on  demand.  It  is  in  reality  a  sight  draft  on 
the  bank.  Banks  provide  blank  checks  for  their  customers,  and 
it  is  a  very  simple  matter  to  fill  them  out  properly.  In  writing  in 
the  amount  begin  at  the  extreme  left  of  the  line.  The  illustration 
given  here  shows  a  poorly  written  check  and  one  which  could  be 


•-.-—•    -^— — -        ofwooDsrowy.        - — • 


» '^ Tm  ORP'EH  or Q-o/vyuLA  — (R»a/wv«AA*ux/w>_/, — -.- 


very  easily  raised.  A  fraudulent  receiver  could,  for  instance, 
write  "  seventy  "  before  the  nine  and  "  7  "  before  the  figure  "9," 
and  in  this  way  raise  the  check  from  $9  to  $79.  If  this  were  done 
and  the  check  cashed,  the  maker,  and  not  the  bank  would  become 
responsible  for  the  loss.  You  cannot  hold  the  bank  responsible 
for  your  carelessness.  A  check  was  raised  from  $100  to  $190  by 
the  writing  * '  and  ninety ' '  after  the  words  ' '  one  hundred. "  One 
of  the  ciphers  in  the  figures  was  easily  changed  to  a  ' '  9 "  by 

adding  a  tail  to  it.     It  is  wise  to  draw  a  running  line~ — , — , 

after  the  amount  in  words,  thus  preventing  any  additional  writing. 
Checks  should  be  dated,  but  the  absence  of  a  date  does  not 
warrant  a  bank  in  refusing  to  cash  the  check.  Notes  made  and 
executed  on  Sunday  are  invalid,  but  a  check  so  dated  is  good. 
The  signature  should  be  in  your  usual  style  familiar  to  the 
paying  teller.  A  check  is  a  draft  or  order  on  a  bank,  and 


AND  NEGOTIABLE;  PAPER. 


need  not  necessarily  be  written  in  the  prescribed  form.  Such  an 
order  written  on  a  sheet  of  note-paper  with  a  lead  pencil  might  be 
in  every  way  a  legally  good  check.  If  it  is  necessary,  any  time,  to 
write  a  check  for  a  fractional  part  of  a  dollar,  as  75  cts.,  write 
"Seventy  Five  Cents"  and  draw  your  pen  through  the  printed 
word  Dollars.  There  harder-  '  _  clle  office  of  the  Pacific  Mills, 


Boston,  the  cancelled  check  of  the  United  States  for  one  cent ;  and 
on  the  walls  of  the  Bank  of  Commerce,  New  York  City,  hangs  a 
handsomely  framed  check  for  $14,000,000,  signed  by  the  well- 
known  banking  house  of  Kidder,  Peabody  &  Co.  Usually  checks 
should  be  drawn  "to  order."  The  words,  "Pay  to  the  order  of 
John  Brown  ' '  mean  that  the  money  is  to  be  paid  to  John.  Brown 
or  to  any  person  he  orders  it  paid  to.  If  a  check  is  drawn  ' '  Pay 
to  Bearer,"  any  person,  that  is  the  bearer,  can  collect  it.  The 
paying  teller  may  ask  the  person  cashing  the  check  to  write  his 
name  on  the  back  simply  to  have  it  for  reference.  In  writing  and 
signing  checks  use  good  black  ink  and  let  the  copy  dry  a  little  before 
a  blotter  is  used.  Safety  devices  to  prevent  the  fraudulent  altera: 
tion  of  checks  are  of  almost  endless  variety,  but  there  has  not  been 
a  preventive  against  forgery  and  alterations  yet  invented  which 
has  not  been  successfully  overcome  by  swindlers.  A  machine  for 
punching  out  the  figures  is  in  common  use,  but  the  swindler  has 
successfully  filled  in  the  holes  with  paper  pulp  and  punched  other 
figures  to  suit  his  purposes.  The  method  adopted  by  the  express 
companies  and  by  the  post  office  department  in  its  new  money 
order  is  perhaps  the  best  plan  yet  offered  to  prevent  the  raising  of 
the  amount  of  a  check  or  order.  We  give  here  a  photo-engraved 
copy  of  a  Wells,  Fargo  Express  order  to  illustrate  this  point. 


i6 


BANKING,    COLLECTIONS, 


Notice  the  printing  on  the  left  end.  To  raise  such  an  order  it  would 
be  necessary  to  add  to  the  length  of  the  paper,  which  of  course 
would  be  impossible.  The  most  experienced  bankers  favor  a  plain 
black  and  white  check,  drawn  upon  clear  white  paper  with  good 
strong  black  ink.  There  are  often  presented  to  banks  for  payment, 
checks  in  which  the  figures  in  the  margin  do  not  correspond  with 
the  amounts  stated  in  writing  in  the  body  of  the  checks.  The  law 


governing  cases  of  this  sort  provides  distinctly  that  the  amount  in 
writing  shall  be  considered  correct.  If  the  amount  of  money  in- 
volved were  large,  the  paying  teller  would  be  justified  in  withhold- 
ing payment  until  he  satisfied  himself  that  the  amount  in  writing 
was  what  the  maker  really  intended  the  check  to  call  for. 

Identification. 

The  banks  of  this  country  make  it  a  rule  not  to  cash  a  check 
that  is  drawn  payable  to  order,  unless  the  person  presenting  the 
check  is  known  at  the  bank — or  unless  he  satisfies  the  paying 
teller  that  he  is  really  the  person  to  whom  the  money  is  to  be  paid. 
It  must  be  remembered,  however,  that  a  check  drawn  to  order  and 
then  endorsed  in  blank  by  the  payee  is  really  payable  to  bearer, 
and  if  the  paying  teller  is  satisfied  that  the  payee's  signature  is 
genuine  he  will  not  likely  hesitate  to  cash  the  check.  In  England, 
all  checks  apparently  properly  endorsed  are  paid  without  identi- 
fication. In  drawing  a  check  in  favor  of  a  person  not  likely  to  be 
well-known  in  banking  circles,  write  his  address  or  his  business 
after  his  name  on  the  face  of  the  check.  For  instance,  if  you 


AND  NEGOTIABLE  PAPER. 


should  send  a  check  to  John  Smith,  Boston,  it  may  possibly  fall 
into  the  hands  of  the  wrong  John  Smith  ;  but  if  you  write  the 
check  in  favor  of  "John  Smith,  849  Tremont  St.,  Boston,"  it  is 
more  than  likely  that  the  right  person  will  collect  it.  If  you  wish 
to  get  a  check  cashed  where  you  are  unknown,  and  it  is  not  con- 
venient for  a  friend  who  has  an  account  at  the  bank  to  go  with 
you  for  the  purpose  of  identification,  ask  him  to  place  his  signature 
on  the  back  of  your  check,  and  you  will  not  likely  have  trouble  in 
getting  it  cashed.  By  placing  his  signature  on  the  back  of  the 
check  he  guarantees  the  bank  against  loss.  A  bank  is  responsible 
for  the  signatures  of  its  depositors,  but  it  cannot  be  supposed  to 
know  the  signatures  of  endorsers.  The  reliable  identifier  is  in 
reality  the  person  who  is  responsible. 

A  Banker's  Hints. 

Do  not  draw  a  check  unless  you  have  the  money  on  deposit 
or  in  your  possession  to  deposit.  Do  not  test  the  generosity  of 
your  bank  by  presenting,  or  allowing  to  be  presented,  your  check 
for  a  larger  sum  than  your  balance.  Do  not  draw  a  check  and 
send  it  to  a  person  out  of  the  city  expecting  to  make  good  the 
amount  before  it  gets  back.  Do  not  give  your  check  to  a  friend 
with  the  condition  that  he  is  not  to  use  it  until  a  certain  time. 
Do  not  send  ignorant  and  stupid  messengers  to  the  bank  to  trans- 
act your  business. 

Check    Endorsements. 

In  endorsing  checks  note  the  following  points:  i.  Write 
across  the  back — not  lengthwise.  2.  If  your  endorsement  is  the 
first,  write  it  an  inch  or  two  from  the  top  of  the  back  ;  if  it  is  not 
the  first  endorsement  write  immediately  under  the  last  endorse- 
ment. 3.  Don't  endorse  wrong  end  up  ;  the  top  of  the  back  is  the 
left  end  of  the  face.  4.  Write  your  name  as  you  are  accustomed 
to  write  it,  no  matter  how  it  is  written  on  the  face.  5.  If  you  are 
depositing  the  check  write  or  stamp  "For  Deposit"  over  your 
signature.  This  is  hardly  necessary  if  you  are  taking  the  check 
yourself  to  the  bank.  A  check  with  a  simple  or  blank  endorse- 
ment on  the  back  is  payable  to  bearer,  and  if  lost,  the  finder  might 
succeed  in  collecting  it,  but  if  the  words  ' '  For  deposit ' '  appear 
over  the  name,  the  bank  officials  understand  that  the  check  is 


i8 


BANKING,    COLLECTIONS, 


FOR  DEPOSIT     TO  THT 
CREDIT     OF 


intended  to  be  deposited,  and  they  will  not  cash  it.     6.    If  you 
wish  to  make  the  check  payable  to  some  particular  person  by 

endorsing,  write  "Pay  to  .(.N.™ or  order,"  and  under 

this  write  your  own  name  as  you  are  accustomed  to  sign  it.     7.  Do 

not  carry  around  endorsed 
checks  loosely.  Such  checks 
are  payable  to  bearer,  and  may 
be  collected  by  any  one.  8.  If 
you  receive  a  check  which  has 
been  transferred  to  you  by  a 
blank  endorsement,  and  you 
wish  to  hold  it  a  day  or  two, 
write  over  the  endorsement- 
the  words  ( '  Pay  to  the  order  oj 

£™?«!H>: "       This  is 

allowable  legally.  The  check 
cannot  then  be  collected  until 
you  endorse  it.  9.  An  autho- 
rized stamped  endorsement  is 
as  good  as  a  written  one. 
Whether  such  endorsements 
are  accepted  or  not  depends 
upon  the  regulations  of  the 
clearing  house  in  the  particular  city  in  which  they  are  offered  for 
deposit.  In  New  York  City  the  use  of  stamped  endorsements  is 
universal.  The  written  endorsement  is  safer  for  transmission  of 
out-of-town  collections.  10.  If  you  are  endorsing  for  a  company, 
or  society,  or  corporation,  write  first  the  name  of  the  company  and 
then  your  own  name  followed  by  the  word  "  Treas."  n.  If  you 
have  power-of-attorney  to  endorse  for  some  particular  person,  write 
his  name  followed  by  your  own,  followed  by  the  word  '  'Attorney ' '  or 
'  'Atty  "  as  it  is  usually  written.  12.  Where  checks  are  sent  out  by 
the  receiving  (deposit)  bank  to  all  parts  of  the  country  for  collection, 
it  is  customary  for  the  bank  to  stamp  upon  the  back  of  the  check 
the  words  "ENDORSEMENT  GUARANTEED."  Sometimes  a  check 
reaches  a  bank  through  responsible  parties,  who  are  not  its  payees, 
without  bearing  the  payee's  endorsement.  The  bank  may  decide 
to  pay  without  demanding  the  absent  endorsement,  since  such  a 
demand  would  cause  considerable  delay  and  trouble,  if  the  presenter 
or  the  presentee  of  the  check  guarantees  the  absence  of  the 


AND  NEGOTIABLE  PAPER. 


endorsement.     This  he  does  by  writing  "  Absence  of  endorsement 
guaranteed,'"    with   his    signature,    on   the  back    of   the  check. 
Of  course,  this  is  practically  a  guarantee  against  loss  and  trouble 
to  the  banker,  which  might  result  from  the  absence  of  the  endorse- 
ment.    The  banks  of  some  cities  will  not  accept  such  guarantee. 
It  is  sometimes  permissable  to  endorse  the  payee's  name   "by 
......  (™™.  ?™.™:>  .......  V     This  may  be  done  by  a  junior  member  of  a 

concern  when  the  person  authorized  to  endorse  checks  is  absent, 
and  the  checks  are  deposited  and  not  cashed.  If  a  check  lacks 
the  endorsement  of  the  original  payee,  it  may  be  wise,  if  con- 
venient to  do  so,  to  get  it  certified  before  sending  it  back  for  such 
endorsement.  13.  Write  your  check  payable  to  the  order  of  some 
person,  but  don't  write  "  Pay  to  the  order  of  Chas.  Hood  &  Co., 
for  subscription  to  Ledger  for  1897"  Such  information  on  a  paid 
check  may  serve  some  purpose  of  yours,  but  it  is  not  good  business. 
Descriptive  and  qualifying  matter  is  quite  proper  in  the  letter 
accompanying  the  check,  and  if  the  letter  has  been  copied,  it  is 
just  as  legally  valuable.  14.  Do  not  write  any  unnecessary 
information  on  the  back  of  your  check.  A  story  is  told  of  a 
woman  who  received  a  check  from  her  husband,  and  when  cashing 
it,  wrote  '  '  Your  loving  wife  '  '  above  her  name  on  the  back. 

Gashing   your    own    Check. 

If  you  wish  to  draw  money  from  your  own  account,  the  most 
approved  form  of  check  is  written  "  Pay  to  the  order  of  Cash." 
This  differs  from  a  check  drawn  to  "Bearer"     The  paying  teller 
expects  to  see  you  yourself  or  some  one  well-known  to  him  as  your 
representative,  when  you  write  "Cash"     If  you  write  "Pay  to 
the  order  of.  .....  £?™..°™.™.¥«.:>  ......  ,"  you  will  be  required  to  endorse 

your  own  check  before  you  can  get  it  cashed. 

Checks    for    Special    Purposes. 

If  you  wish  to  draw  a  check  to  pay  a  note,  write  '  '  Pay  to  the 
order  of  Bills  Payable"  If  you  wish  to  write  a  check  to  draw 
money  for  wages,  write  '  '  Pay  to  the  order  of  Pay  Roll.  '  '  If  you 
wish  to  write  a  check  to  pay  for  a  draft  which  you  are  buying, 
write  '  '  Pay  to  the  order  of  N.  Y.  Draft  and  Exchange  ',  '  '  or  what- 
ever the  circumstances  may  call  for. 


BANKING,    COLLECTIONS, 


"No   Funds." 

If  you  have 
deposited  a  check 
and  it  is  returned 
through  your 
bank  marked 
"No  Funds,"  it 
signifies  that  the 
check  is  worth- 
less and  that  the 
person  upon 
whose  account  it 
was  drawn  has 
no  funds  to  meet 
it.  Your  bank 
will  charge  the 
amount  to  your 
account.  The 
best  thing  to  do 
in  such  a  case  is 
to  hold  the  pro- 
tested check  as 
evidence  of  the 
debt  and  write 
the  person  who 
sent  it  to  you 
giving  particu- 
lars and  asking 
for  an  explana- 
tion. There  is 
no  advantage  in 
having  the  check 
protested  unless 
it  has  an  endorser 
other  than  your- 
self. One  of  the 
bankers'  jour- 
nals gives  an 
instance  of  a  man 
who  had  a  check 


AND  NEGOTIABLE  PAPER. 


21 


for  $900,  which  he  took  to  get  cashed.  He  learned  that  the  drawer 
had  only  $700  on  deposit,  and  knowing  that  he  (the  drawer)  was 
embarrassed  financially,  the  man  deposited  to  the  drawer's  credit 
$200  of  his  own  money,  and  then  presented  his  $900  check  and 
had  it  cashed. 

Stopping    Payment. 

If  you  wish  to  stop  the  payment  of  a  check  which  you  have 
issued  you  should  notify  the  bank  at  once,  giving  full  particulars 
of  the  check. 

Cancelling    Checks. 

Banks  have  a  custom,  after  paying  and  charging  checks,  of 
cancelling  them  by  punching  or  by  making  some  cut  through  their 
face.  These  cancelled  checks  are  returned  to  the  makers  at  the 
end  of  each  month. 

Checks    presented    after   Death. 

As  a  general  rule  banks  are  expected  to  stop  the  payment  of  a 
check,  the  signer  of  which  has  died  before  its  presentation.  This  is 
not  always  possible  for  the  reason  that  information  as  to  the  death  of 
a  customer  may  not  reach  the  bank  for  days,  so  that  in  reality  banks 
are  every  day  paying  checks  of  men  who  are  dead.  In  Massa- 
chusetts, checks  are  good  for  ten  days  after  the  death  of  the  signer. 

Checks    should    he    Numbered. 

Checks  should  be  numbered  so  that  each  can  be  accounted  for. 
The  numbers  are  for  your  convenience  and  not  for  the  convenience 
of  the  bank.  It  is  important  that  your  check  book  be  correctly 
kept,  so  that  you  can  tell  at  any  time  how  much  money  you  have 
in  the  bank.  At  the  end  of  each  month  your  small  bank  book 
should  be  left  at  the  bank  so  that  the  book-keeper  may  balance  it. 
It  may  happen  that  your  bank  book  will  show  a  larger  balance 
than  your  check  book.  You  will  understand  by  this,  if  both  have 
been  correctly  kept,  that  there  are  checks  outstanding  which  have 
not  yet  been  presented  at  your  bank  for  payment.  You  can  find  out 
which  these  are  by  checking  over  the  paid  checks  that  have  been 
returned  to  you  with  your  bank  book.  The  unpaid  checks  may  be 
presented  at  any  time,  so  that  your  actual  balance  is  that  shown 
by  your  check  book.  Checks  should  be  presented  for  payment  as 
soon  after  date  as  possible. 


22  BANKING,    COUvECTlONS, 

Certified    Checks. 

If  you  wish  to  use  your  check  to  pay  a  note  due  at  some  other 
bank,  or  in  buying  real  estate,  or  stocks,  or  bonds,  you  may  find  it 
necessary  to  get  the  check  certified.  This  is  done  by  an  officer  of 
the  bank  who  writes  or  stamps  across  the  face  of  the  check  the 
words  "  Certified"  or  "  Good  when  properly  endorsed"  and  signs 
his  name.  See  illustration.  The  amount '  will  immediately  be 


0V 

d  " 

2 

5 
j 

5 

CQ 
U 
J 
m  ,  ^ .  „  _  ^  -  ~  ^.  ^  ^ 

£_     j^*2c^s*<-«^«.^*j«^_^^r^^H^-^ — -^ -  -..  - "--  Dollars. 

GJ 
V 


Pay  to  the  order  of 


*   5 


deducted  from  your  account,  and  the  bank,  by  guaranteeing  your 
check,  becomes  responsible  for. its  payment.  Banks  will  usually 
certify  any  check  drawn  upon  them  if  the  depositer  has  the  amount 
called  for  to  his  credit,  no  matter  who  presents  the  check.  If  you 
should  get  a  check  certified  and  then  not  use  it,  deposit  it  in  your 
bank,  otherwise  your  account  will  be  short  the  amount  for  which 
it  is  drawn.  In  Canada,  all  checks  are  presented  to  the  "  ledger 
keeper ' '  for  certification  before  being  presented  to  the  paying  teller. 

Bank    Drafts. 

Your  bank  check  is  really  your  sight  draft  on  your  bank.  Of 
course  it  differs  from  an  ordinary  commercial  draft,  not  only  in  its 
wording,  but  in  its  purpose.  A  check  is  used  for  paying  money 
to  a  creditor,  while  a  draft  is  used  as  a  means  of  collecting  money 
from  a  debtor.  The  bank  is  obliged  to  pay  your  check  if  it  has 
funds  of  yours  sufficient  to  meet  it,  while  the  person  upon  whom 
your  draft  is  drawn  may  or  may  not  honor  it  at  his  pleasure. 
Banks  keep  money  on  deposit  in  one  or  more  other  banks  located 
in  some  of  the  commercial  centres.  Nearly  all  large  banks  keep 


AND  NEGOTIABLE  PAPER. 


money  on  deposit  with 
one  or  more  of  the 
New  York  City  banks. 
They  call  these  banks 
their  New  York  corre- 
spondents. A  bank 
draft  is  simply  the 
bank's  check,  drawing 
on  its  deposit  with 
some  other  bank. 
Banks  sell  .these 
checks  to  their  custo- 
mers. Merchants 
make  large  use  of 
these  drafts,  or  cash- 
ier's checks  as  they  are 
sometimes  called,  in 
making  remittances 
from  one  part  of  the 
country  to  another. 
These  drafts  or  checks 
pass  as  cash  anywhere 
within  a  reasonable 
distance  of  the  money 
centre  upon  which  they 
are  drawn.  Banker's 
drafts  on  New  York 
would,  under  ordinary 
financial  conditions, 
be  considered  cash 
anywhere  in  the  Uni- 
ted States.  A  draft 
on  a  foreign  bank  is 
commonly  called  a  bill 
of  exchange.  Bills  of 
exchange  are  usual  y 
drawn  "in  duplicate, 
one  of  which  is  for- 
warded and  the  other 
retained.  They  are  so 
worded  that  when  the 


24  BANKING  COLLECTIONS, 


original  is  paid  the  duplicate  becomes  void.  They  are  drawn  in 
the  currency  of  the  country  where  they  are  made  payable.  These 
drafts  are  used  to  pay  accounts  in  foreign  countries  just  as  drafts 
on  New  York  are  used  to  pay  indebtedness  at  home. 

The    Clearing-House    System. 

In  large  cities  checks  representing  millions  of  dollars  are 
deposited  in  the  banks  every  day.  The  separate  collection  of  these 
would  be  almost  impossible,  were  it  not  for  the  clearing-house 
system.  Each  large  city  has  its  clearing-house.  It  is  an  establish- 
ment formed  by  the  banks  themselves,  and  for  their  own  con- 
venience. The  leading  banks  of  a  city  connect  themselves  with 
the  clearing-house  of  that  city,  and  through  other  banks  with 
the  clearing-houses  of  other  cities,  particularly  New  York. 
Country  banks  connect  themselves  with  one  or  more  clearing- 
houses through  city  banks  which  do  their  business  for  them.  The 
New  York  banks,  largely  through  private  bankers,  branches  of 
foreign  banking  houses,  connect  themselves  with  L,ondon.  So 
that  each  bank  in  the  world  is  connected  indirectly  with  every 
other  bank  in  the  world,  and  in  L,ondon  is  the  final  clearing- 
house of  the  world.  The  clearings  in  New  York  in  one  day 
amount  to  from  one  to  two  hundred  millions  of  dollars — twice  as 
much  as  all  the  other  cities  in  America  put  together.  Usually 
once  a  week  the  banks  of  a  city  make  to  their  clearing-house  a 
report,  based  on  daily  balances,  of  their  condition. 

Check    Collections* 

Each  bank  in  a  city  receives  on  deposit,  daily,  checks  on  other 
banks.  Instead  of  sending  these  by  messenger  to  the  other  banks 
they  are  sent  to  the  clearing-house  at  a  fixed  hour  each  day — in 
some  cities  twice  a  day.  The  banks  of  a  clearing-house  city  are 
numbered.  These  numbers  are  seen  stamped  upon  checks  which 
the  bank  handles  in  the  process  of  collection.  Bank  A  may  for 
instance  carry  checks  amounting  to  $200,000  to  the  clearing-house 
for  collection.  Banks  C,  D,  H  and  F  may  have  checks  on  A 
amounting  to  $189,240,  which  they  send  to  the  clearing-house  for 
collection.  This  would  show  a  balance  of  $10,760  in  A's  favor, 
which  is  paid  to  bank  A  by  the  clearing-house  in  clearing-house 
certificates  or  due  bills.  If  the  balance  were  against  A,  the  amount 
due  would  have  to  be  made  up  within  the  hour  limit  fixed  by  the 


AND  NEGOTIABLE  PAPER. 


clearing-house  regulations.  Suppose,  for  illustration,  that  Brown  of 
Lynn  owes  Smith  of  Media  $25,  and  pays  the  amount  by  a  check 
on  a  Lynn  bank.  This  check  will  go  by  mail  from  Lynn  to  Media. 
Smith  will  deposit  it  in  a  Media  bank.  The  Media  bank  will  send 
it  with  other  checks  to  its  Philadelphia  correspondent,  say  the 


Penn  National.  The  Penn  National  will  send  it  with  other  checks 
to  its  New  York  correspondent,  say  the  Chemical.  The  Chemical 
will  forward  it  with  other  checks  to  its  Boston  correspondent,  say 
the  First  National.  Now  the  First  National  of  Boston  may  not  be 
the  Boston  correspondent  of  the  Lynn  bank.  It  therefore  sends 
the  check  for  collection  through  the  Boston  clearing-house  to  the 
bank  which  does  the  Boston  business  for  the  particular  Lynn 
bank  upon  which  the  check  is  drawn,  say  the  Second  National. 
The  Second  National  sends  the  check  to  Lynn,  where  it  is  charged 
up  against  Brown's  account.  This  system  of  collections  is  almost 
as  perfect  as  is  the  post  office  system  of  carrying  registered  mail. 

The  Wanderings  of  Checks. 

Under  old-fashioned  methods,  each  bank  was  in  the  habit  of 
selecting  its  collection  agents,  sending  them  by  mail  their  collection 
paper,  charging  their  customers  very  substantial  collection  rates, 
and  passing  the  same  to  their  credit  when  collected.  Nowadays 


26 


BANKING,    COLLECTIONS, 


the  country  trader,  no  matter  where  he  is  located,  sends  his  check 
on  a  local  bank  to  pay  his  account  in  a  distant  city,  and  the 
receiver  of  the  check  expects  his  bank  to  collect  the  amount  of 


Yo**c 


the  check  free  of  expense,  and  to  give  him  full  credit  for  it  the 
day  it  is  deposited.  Suppose  for  instance  that  a  merchant  of 
Selma,  Ala. ,  sends  his  check  on  a  Selma  bank  by  mail  to  pay  a 
bill  in  Alpena,  Mich.  The  Alpena  merchant  deposits  it  in  his 
local  bank,  and  this  local  bank  sends  it  to  its  Detroit  correspondent. 
That  is,  deposits  it  in  the  Detroit  bank  where  its  account  is  kept. 
The  Detroit  bank  sends  the  check  to  its  Chicago  correspondent. 
The  Chicago  bank  may  have  no  connection  with  a  Southern  city. 
It  sends  the  check  to  its  New  York  correspondent.  The  New  York 
bank  forwards  the  check  to  New  Orleans,  where  it  ma}"  pass 
through  the  clearing-house  to  some  other  New  Orleans  bank 
which  forwards  it  to  its  correspondent  in  Mobile.  The  Mobile 


AND  NEGOTIABLE  PAPER. 


bank  sends  the  check  to  Selma  and  has  it  charged  up  to  the 
account  of  the  man  who  issued  it.  Now  all  these  banks  ana 
clearing-houses  through  which  the  check  passes,  stamp  their 
endorsements  and  other  information  on  the  back  of  the  check. 
Our  illustration  shows  a  photo  copy  of  the  backs  of  two  checks 


***» 


flay  WWM, 

TEB  27  1889  '" 

•3  ibt  -Second  Hall  Bard,  of 


'A  'N  ' 


A11D 


PAV  T1wi?  ORDER 
«VW^ 


FOR  OEPOSJT  IN  THS 

NATIONAL  CITY  BANK 


OF 


BAHK 


N. 


<«*& 


PAY  TCE  ORDER  OF  THE 


which  have  "travelled."  Millions  of  dollars  are  collected  by 
banks  daily  in  this  way,  and  all  without  expense  to  their  custo- 
mers. It  is  estimated  that  these  collections  cost  the  New  York 
city  banks  more  than  two  million  dollars  a  year  in  loss  of  interest 
while  the  checks  are  en  route.  Ten  thousand  collection  letters  are 
sent  out  every  day  by  the  banks  of  New  York  City  alone. 


28 


BANKING,   COIJ/ECTIONS, 


Organization    of  Banks. 

The  National 
banks  are  organ- 
ized under  na- 
tional laws,  while 
state  banks,  sav- 
ings banks,  etc., 
are  organized 
under  the  laws 
of  the  State  in 
which  they  are 
located.  Any 
person  who  has 
money  and  credit 
can  start  a  pri- 
vate bank.  Some 
of  the  largest 
banking  institu- 
tions of  the  world 
are  owned  by 
private  individu- 
als, and  are  not 
subject  to  law 
any  more  than 
is  any  other  kind 
of  business  con- 
cern. Trust  com- 
panies are,  in 
some  particulars, 
similar  to  banks. 
They  receive 
deposits  and 
make  loans,  but 
they  do  not 
usually  under- 
take the  general 
collection  of  com- 
mercial paper. 
They  act  as  trus- 
tees for  corpora- 
tions, as  agents 


AND  NEGOTIABLE  PAPER. 


for  the  sale  of 
stocks,  as  execu- 
tors, administrators 
and  guardians  of 
money  for  courts. 
They  make  invest- 
ments, collect  inter- 
est and  rents,  and 
perform  many  other 
financial  services. 

Kiting. 

Don't  exchange 
checks  to  get 
twenty-four  hours' 
credit.  This  is  often 
done.  The  banks 
call  it  kiting.  If 
your  bank  finds 
that  kiting  is  in- 
cluded in  your  busi- 
ness methods,  do 
not  be  surprised  if 
you  are  asked  to 
withdraw  your  ac- 
count. Banks  can- 
not afford  to  lend 
you  money  even  for 
twenty-four  hours 
without  interest  or 
security .  To  illus- 
trate, suppose  it  is 
12  o'clock  noon — 
after  the  bank-clear- 
ing at  the  clearing- 
house. A  is  short 
and  needs  $500. 
He  gives  B  his 
check  for  $500  and 
takes  B's  check  for 
$500.  B's  check 


BANKING,   COLLECTIONS, 


may  not  be  any 
better  than  A's, 
but  A  deposits  it 
and  has  ample 
time  before  three 
o'clock  to  draw 
on  the  deposit 
and  use  some  of 
the  money.  B 
may  do  the  same 
with  A's  check. 
Other  checks  or 
cash  are  deposit- 
ed in  the  morn- 
ing before  clear- 
ing-house hours 
so  that  the  $500 
checks  may  be 
met  when  they 
come  in  for  col- 
lection. A  may 
accomplish  the 
same  end  by  hav- 
ing accounts  in 
two  banks  and 
by  depositing  a 
check  on  the  one 
in  the  other,  < 

Forged  Cheeks.     , 

Who  is  liable 
when  a  forged 
check  has  been 
paid?  This  ques- 
tion is  often 
asked,  and  the 
answer  varies 
with  circumstan- 
ces. Ordinarily 
the  bank  must 
stand  the  loss, 


AND   NEGOTIABLE  PAPER. 


but  if  the  fraud  is  the  result  of  carelessness  on  the  part  of  the 
person  whose  name  is  forged,  the  bank  is  not  liable.  Business 
men  should  not  only  make  use  of  the  most  approved  methods  of 
protecting  their  checks  but  they  should  take  every  possible  pre- 
caution to  prevent  improper  use  of  the  blank  forms  by  keeping 
them  in  places  inaccessible  to  anyone  but  those  of  their  own  count- 
ing-rooms who  are  authorized  to  write  up  their  checks. 

Signatures. 

In  the  course  of  business  we  often  come  across  very  queer 
specimens  of  writing  and  eccentricities  in  signatures.  A  New 
York  Insurance  Company's  Vice-President  has  a  signature,  as  it 


appears  on  the  policies  issued  by  his  company,  which  is  fourteen 
inches  one  way  and  nine  inches  the  other.     In  our  illustration  the 


BANKING,    COLLECTIONS, 


signature  at  the  top  on  the  left  is  that  of  F.  S.  Watte,  teller  of  an 
Iowa  bank.  Immediately  under  this  name  is  that  of  John  Mohr, 
Jr.,  cashier  of  a  bank  in  Indiana.  Under  Mohr's  signature  is  that 
of  Tom  Randolph,  president  of  a  bank  in  Texas.  Directly  under 
Randolph's  signature  we  find  a  cross-etching  which  represents  the 
treasurer  of  a  manufacturing  company  in  Connecticut  —  Hugh 
Harbison.  It  ranks  high  as  a  curiosity  in  penmanship.  The 
writing  at  the  upper  right-hand  corner  is  that  of  Carmon  Parse, 
cashier  of  a  bank  in  New  Jersey.  The  writing  in  the  lower  right- 
hand  corner  filled  the  entire  page  of  a  letter  sheet.  The  name  is 
that  of  Jas.  V.  D.  Westfall.  These  specimens  are  interesting,  but 
after  all  the  best  form  of  signature,  and  the  one  most  difficult  to 
forge,  is  that  written  in  a  plain  business  style,  such  as  "John 
Johnston"  in  the  illustration.  Business  men  and  bankers  areas 
thoroughly  familiar  with  the  signatures  of  other  business  men  as 
they  are  with  their  faces. 

The   Bank's  Cash. 

The  actual  usable  cash  of  a  bank  is  represented  by  the  silver, 
gold  and  bills  on  deposit.  It  is  estimated  that  the  gold  in  use  in 
the  world  amounts  to  $7,  000,000,000,  and  that  an  equal  amount 
has  been  lost  through  wear  and  other  causes  since  the  earliest 
times.  A  million  dollars  in  gold  could  be  put  into  a  box  two  feet 
square  and  a  foot  deep.  All  the  gold  in  the  world  could  be  put 
into  a  room  64  feet  by  50  feet  with  a  height  of  20  feet.  It  is 
estimated  that  a  million  dollars  worth  of  gold  is  each  year  buried 
in  the  cemeteries  of  the  United  States  in  the  mouths  of  the  dead. 
The  gold  in  our  banks  lies  piled  in  bags  containing  $5000  each. 
Each  bag  weighs  twenty-two  pounds.  Standard  gold  is  worth 
$18.96  an  ounce,  and  a  $20  gold  piece  weighs  21  }4  pennyweights. 
In  shipping  gold  from  New  York  to  London  it  is  estimated 
that  a  million  dollars  in  gold  will  be  reduced  in  value,  by  the 
coins  rubbing  against  each  other,  about  $175.  If  a  standard 
gold  coin  falls  short  one-half  of  one  per  cent,  of  its  original 
standard  weight,  it  is  marked  light  weight  the  moment  it  reaches 
the  United  States  Treasurer.  It  then  ceases  to  travel  as  money. 
The  United  States  bills  which  are  considered  cash  are  of  a  variety 
of  kinds.  There  are  in  circulation  over  $300,  000,000  of  treasury 
notes  of  the  following  denominations:  $i,  $2,  $5,  $10,  $20,  $50, 
$100,  $500,  $1000.  These  are  payable  in  coin,  either  gold  or 


AND  NEGOTIABLE  PAPKR. 


33 


silver.  The  national  bank  notes  are  really  promissory  notes, 
issued  by  the  banks,  and  payable  on  demand.  They  are  secured 
by,  and  issued  upon,  United  States  bonds.  Every  national  bank 
must  redeem  its  notes  in  full  in  lawful  money  at  the  treasury  in 
Washington  or  over  its  own  counter  whenever  a  demand  for  pay- 
ment is  made.  The  denominations  of  the  national  bank  notes  are 
the  same  as  those  of  the  treasury  notes,  except  that  there  are  no 
bills  smaller  than  $5.  The  silver  certificates  are  notes  issued  by 
the  United  States  government  and  payable  on  demand  in  silver 
dollars.  Some  hundreds  of  millions  of  dollars  of  this  form  of 
money  is  now  in  circulation.  Notwithstanding  the  fact  that  the 
paper  used  is  of  the  very  best  quality,  paper  money,  the  world 


over,  is  constantly  becoming  ragged  and  mutilated.  It  may  be 
well  to  quote  here  the  law  which  regulates  the  redemption  of 
mutilated  bills.  If  the  whole  face  of  a  note  is  in  a  condition  which 
will  permit  its  being  recognized  as  a  genuine  bill  it  will  be  paid  in 
full.  If  not  more  than  two-fifths  of  the  paper  of  a  national  bank 
note  is  gone  and  the  note  shows  the  name  of  the  bank  and  the 
re  of  one  of  its  officers,  it  will  be  paid  in  full.  A  fragment 
of  a  national  bank  note  which  does  not  clearly  amount  to  two- 
fifths  of  the  original  paper  is  not  redeemable  at  all,  except  a  satis- 
factory affidavit  can  be  presented,  showing  that  the  balance  of  the 
note  has  been  destroyed.  When  a  national  bank  note  amounts  to 


34  BANKING,    COLLECTIONS, 

two-fifths  or  more,  and  not  over  three-fifths,  it  is  redeemed  at  its 
proportional  value.  The  circular  of  the  treasury  department  for 
other  than  national  bank  notes  rules  that  one-tenth  of  .the  value  of 
the  bill  is  to  be  deducted  for  each  tenth  or  fraction  thereof  missing, 
unless  the  note  is  clearly  less  than  one-half,  when  it  is  not  redeem- 
able. 

Counterfeit  Notes. 

All  United  States  notes  are  printed  in  sheets  of  four  notes  of 
one  denomination  on  each  sheet.  Each  note  is  lettered  and  num- 
bered twice.  All  notes  of  which  the  number  when  divided  by 
4,  shows  a  remainder  of  one,  have  the  check  letter  A  ;  a  remain- 
der of  2,  the  check  letter  B  ;  a  remainder  of  3,  the  check  letter  0  ; 
those  numbers  which  divided  by  4  show  no  remainder,  have  the 
check  letter  D.  Any  United  States  note  the  number  of  which 
cannot  be  divided  by  4  and  show  one  of  the  foregoing  results  is  a 
counterfeit.  There  are  no  secrets  in  the  art  of  detecting  counter- 
feits. Careful  study,  long  experience,  and  a  thorough  familiarity 
with  all  kinds  of  genuine  bills,  will  make  any  person  an  expert. 
Banks  are  required  by  law  to  stamp  as  '  *  Counterfeit ' '  all  bad  bills 
coming  into  their  possession. 

Bank  Loans. 

A  portion  of  the  loans  of  many  banks  consists  of  investments 
in  solid  bonds,  but  the  bulk  of  the  loans  of  banks  are  made  on 
commercial  paper ;  time  and  demand  loans  are  made  upon  collaterals 
of  many  descriptions.  The  larger  banks  loan,  on  an  average,  from 
fifty  to  one  hundred  thousand  dollars  a  day.  A  very  large  pro- 
portion of  the  commercial  paper  discounted  is  first  handled  by  note 
brokers.  Banks  discount  paper  for  their  depositors — and  simply 
term  the  operation  discounting ;  but  when  they  go  outside  of 
their  line  of  depositors,  in  making  investments  in  time  paper, 
they  call  it  buying  paper.  They  generally  buy  from  private  bankers 
and  note  brokers.  National  banks  are  prohibited  from  loaning 
over  ten  per  cent,  of  their  capital  to  any  one  individual  or  corpora  - 
tion,  except  upon  paper  representing  actually  existing  merchandise 
Accurate  Interest. 

The  treasury  department  at  Washington  pays  accurate  inter- 
est, founded  on  a  basis  of  365  days  to  the  year.  The  great  major- 
ity of  banks  pay  and  charge  interest  on  a  basis  of  360  days  to 
the  year. 


AND    NEGOTIABLE   PAPER. 


35 


Money  "  On  Call." 

National  banks  located  in  clearing-house  centers,  find  it  a 
very  convenient  thing  to  put  out  quite  a  percentage  of  their  loans 
on  call.  In  some  cities  banks  have  a  habit  of  borrowing  on  call 
from  each  other  at  clearing-house  settlements.  Call  loans  are 
payable  on  demand  and  are  secured  by  demand  notes. 

Collaterals. 

If  a  business  man  borrow  $1000  from  a  bank  on  his  note  and 
give  ten  shares  of  stock  to  the  bank  to  be  held  by  it  simply  as 
security,  the  stock  thus  given  would  be  termed  collateral.  These 
collaterals  are  not  the  bank's  property,  and  the  bank  is  responsible 
for  their  safe-keeping.  If  coupons  mature  while  bonds  are  being 
held  as  collateral,  the  owners  are  usually  allowed  to  collect  the 
amount  for  which  they  sell.  Sometimes  one  note  is  given  as 
collateral  security  for  another  which  is  discounted. 

Promissory  Notes. 

A  promissory  note  is  a  written  promise  to  pay  a  specified  sum 
of  money.  At  the  time  of  the  note's  issue,  that  is,  when  signed 
and  delivered,  two  parties  are  connected  with  it  :  the  maker  and 


the  payee.  The  maker  is  the  person  who  signs  or  promises  to  pay 
the  note,  and  the  payee  is  the  person  to  whom  or  to  whose  order 
the  note  is  made  payable.  Negotiable  in  a  commercial  sense 


BANKING,    COLLECTIONS, 


means  transferable  and 
a  negotiable  note  is  a 
note  which  can  be 
transferred  from  one 
person  to  another.  A 
note  to  be  made  nego- 
tiable, must  contain 
the  word  order  or  the 
word  bearer,  that  is, 
it  must  be  payable 
either  to  bearer  or  to 
the  order  of  the  payee. 
A  non-negotiable  note 
is  payable  to  a  partic- 
ular person  only.  A 
note  may  be  written 
on  any  kind  of  paper 
in  ink  or  in  pencil. 

Date  of  a  Note. 

The  date  of  a  note 
is  a  matter  of  the  first 
importance .  Some 
bankers  and  business 
men  now  consider  it 
better  to  draw  notes 
and  time  drafts  paya- 
ble at  a  certain  fixed 
time  ;  as,  ' '  I  promise  to 
pay  on  the  loth  of 
March,  1897."  The 
common  custom,  how- 
ever, is  to  make  notes 
payable  a  certain  num- 
ber of  days  or  months 
after  date.  A  note 
made  and  issued  on 
Sunday  is  void.  The 
day  of  maturity  is  the 
day  on  which  a  note 


AND  NEGOTIABLE   PAPER.  37 

becomes  legally  due.  In  most  of  the  states  a  note  is  not  legally 
due  until  three  days,  called  days  of  grace,  after  the  expiration  of  the 
time  specified  in  the  note.  The  words,  <l  without  defalcation  "  are 
inserted  in  Pennsylvania  notes. 

Value  Received. 

These  words  are  not  legally  necessary  although  they  usually 
appear  on  ordinary  promissory  notes.  Thousands  of  good  notes 
made  without  any  value  consideration  are  handled  daily.  The 
promise  to  pay  of  a  negotiable  note  must  be  unconditional.  It 
cannot  be  made  to  depend  upon  any  contingency  whatever.  A 
note  made  payable  in  anything  but  money  is  simply  a  form  of 
contract  and  is  not  a  negotiable  instrument. 

Accommodation. 

Notes  and  acceptances  that  are  made  in  settlement  of  genuine 
business  transactions  come  under  the  head  of  regular,  legitimate 
business  paper.  An  accommodation  note,  or  acceptance,  is  one 
which  is  signed,  or  endorsed,  or  accepted,  simply  as  an  accommo- 
dation, and  not  in  settlement  of  an  account  or  in  payment  of  an 
indebtedness.  With  banks,  accommodation  paper  has  a  deservedly 
hard  reputation.  However,  there  are  all  grades  and  shades  of 
accommodation  paper,  though  it  represents  no  actual  business 
transaction  between  the  parties  to  it,  and  rests  upon  no  other 
foundation  than  that  of  mutual  agreement.  No  contract  is  good 
without  a  consideration,  but  this  is  only  true  between  the  original 
parties  to  a  note.  The  third  party  or  innocent  receiver,  or  holder 
of  a  note  has  a  good  title,  and  can  recover  its  value,  even  though 
it  was  originally  given  without  a  valuable  consideration.  An 
innocent  holder  of  a  note  which  had  been  originally  lost  or  stolen, 
has  a  good  title  to  it,  if  he  received  it  for  value.  - 

Interest  Notes. 

A  note  does  not  draw  interest  until  after  maturity,  unless  the 
words  with  interest  appear  on  the  face.  Notes  draw  interest  after 
maturity  and  until  paid,  at  the  legal  rate. 

Endorser  of  a  Note. 

An  endorser  of  a  note  is  any  person  who  writes  his  name  on 
the  back  of  it,  and  by  so  doing  guarantees  its  payment.  Endorse- 
ments on  notes  are  usually  made  in  blank,  that  is,  without  the 


38  BANKING,    COUvECTlONS, 

words  of  "  Pay  to  the  order  of."  The  receiver  of  the  note  is  then 
free  to  endorse  it  or  not  at  his  pleasure  if  he  wishes  to  transfer  it. 
The  endorser  is  liable  for  its  payment  if  the  maker  fails  to  meet  it. 
If  an  endorser  should  be  compelled  to  pay  a  note  he  has  a  good 
claim  against  the  maker,  and  against  each  endorser  whose  name 
appears  above  his  own.  An  endorser  to  whose  order  a  note  is 
drawn  or  endorsed,  can  transfer  it  without  becoming  liable  for  its 
payment  by  writing  the  words  ' '  without  recourse ' '  before  or  after 
his  name  on  the  back.  A  person  who  receives  a  promissory  note 
in  good  faith  for  fair  value  before  the  day  of  maturity,  takes  it 
free  from  all  defects  of  title  and  from  all  claims  that  might  be  set 
up  against  any  preceding  holder.  This  is  not  true  of  notes  trans- 
ferred after  maturity. 

Presentation  for  Payment. 

1  A  note  should  be  presented  on  the  exact  day  of  maturity. 
Notes  made  payable  at  a  bank  or  at  any  other  place,  must  be 
presented  for  payment  at  the  place  named.  When  no  place  is 
specified  the  note  is  payable  at  the  maker's  place  of  business  or  at 
his  residence.  The  note  must  not  be  presented  before  or  after 
maturity  but  upon  the  exact  day  of  maturity  if  the  endorsers  are 
to  be  held  liable  for  its  non-payment. 

Protest. 

When  a  note  is  presented  for  payment  at  maturity  and  is  not 
paid,  it  is  usually  protested,  that  is,  a  notary  public  makes  a  formal 
statement  that  the  note  was  presented  for  payment  and  payment 
was  refused.  Notice  of  such  protest  is  sent  to  the  maker  and  to 
each  endorser.  The  bank  should  never  hand  to  its  notary  any 
paper  for  protest  until  it  has  made  sure  that  its  non-payment  has 
not  been  brought  about  by  some  error  or  misunderstanding.  Quite 
often,  even  though  the  paper  has  been  made  payable  at  a  bank, 
the  notary  sends  a  messenger  with  the  note  to  the  maker  to  make 
a  formal  demand  for  payment.  In  taking  in  collection  paper, 
banks  should  obtain  clear  instructions  from  its  owners  as  to 
whether  or  not  it  should  be  protested  in  case  of  non-payment.  It 
by  no  means  follows  that  a  formal  protest  is  not  desired  because 
the  paper  bears  no  endorsements.  Many  banks  make  it  a  rule  to 
protest  all  unpaid  paper  unless  otherwise  ordered. 


AND  NEGOTIABLE)  PAPER. 


39 


Date  of  Maturity. 

In  finding  the  date  of  maturity  it  is  important  to  remember 
that  when  a  note  is  drawn  days  after  date  the  actual  days  must  be 
counted,  and  when  drawn  months  afterdate  the  time  is  leckoned 
by  months. 

Payment  on  a  Note. 

If  a  payment  is  made  to  apply  on  a  note,  such  payment 
should  always  be  endorsed  on  the  back  of  the  note.  Such  endorse- 
ment requires  no  signature.  The  usual  form  is  to  give  the  date 
and  write  "  Received  on  within  note,"  stating  the  amount.  An 
ordinary  separate  receipt  is  not  sufficient.  Each  amount  endorsed 
on  the  back  reduces  the  face  value. 

A  Joint  Note. 

A  note  having  two  or  more  makers  is  called  a  joint  note.  If 
written  "  We  jointly  and  severally  promise  to  pay,"  either  maker 
is  individually  liable  for  the  whole  amount  if  the  other  does  not 
pay  his  share;  if  written,  "We  promise  to  pay,"  each  is  liable 
for  his  one-half.  A  note  written  * c  I  promise  to  pay  ' '  and  signed 
by  two  or  more  persons  is  a  joint  individual  note.  - 

Signature  to  a  Note. 

The  maker's  signature  to  a  note  must  appear  in  some  form 
upon  some  part  of  the  paper.  It  may  be  affixed  by  himself  or  his 
authorized  agent,  and  it  may  be  the  full  name  or  the  initials  only. 

Commercial  Drafts. 

A  commercial  draft  is  really  a  letter  from  one  person  to 
another  requesting  that  a  certain  sum  of  money  be  paid  to  the 
person  who  calls,  or  to  the  bank  or  firm  for  whom  he  is  acting. 
Commercial  usages  recognize  a  particular  form  in  which  this  letter 
is  written  and  the  address  of  the  person  for  whom  it  is  intended  is 
usually  written  at  the  lower  left-hand  corner  instead  of  on  an 
envelope.  Commercial  drafts  are  sent  through  the  banks  instead 
of  directly  through  the  mail.  For  instance  if  A  of  Boston  owes 
B  of  New  York  $100,  B  may  draw  on  A  for  the  amount.  He  may 
deposit  the  draft  in  a  New  York  bank  to  be  forwarded  or  he  may 


BANKING, 


mail  it  himself  to  a  Bos- 
ton bank   for  collection. 
When  the  draft  reaches 
the  Boston  bank,  a  mes- 
senger will  carry  it  to  A. 
If  it  is  a  sight  draft,  that 
is,  if  B  wants  the  money 
paid    at    sight,   immedi- 
ately,   A   may  give  the 
money  to  the  messenger 
and  take  the  draft  as  his 
receipt.     If  it   is   a  time 
draft,  that  is,  if  B  gives 
A  time,  a  certain  number 
of  days  in  which  to  pay 
the   draft,    A    accepts  it. 
He  does  this  by  writing 
the   word    accepted  with 
the  date  and  his  signature 
across    the    face    of   the 
draft.     He  then  returns 
the  draft  to  the  messen- 
ger and  it  is  returned  to 
B.     An  accepted  draft  is 
really  a  promissory  note, 
though  it  is  often  called 
an   acceptance.     When   a 
man   pays  or  accepts  a 
draft  he  is  said  to   honor 
it.     In  this  instance  A  is 
not  obliged  either  to  pay 
or  to  accept  the  draft.    It 
is  not  binding   on    him 
any   more  than   a  letter 
would  be.     Of  course,  if 
he  refuses  to  honor  legiti- 
mate drafts,  it  may  injure 
his  credit  with  the  banks 
and    other     business 
houses. 


AND  NEGOTIABLE  PAPER.  41 

Collections    T>y    Draft. 

It  is  a  very  common  thing  to  collect  distant  accounts  by  means  of 
commercial  drafts.  A  debtor  is  more  likely  to  meet  a  draft  than  he  is 
to  reply  to  a  letter  and  enclose  his  check.  It  is  really  more  convenient 
and  safer  too,  for  there  is  some  risk  in  sending  personal  checks  through 
the  mails.  There  are  some  houses  that  make  all  their  payments  by 
check,  while  there  are  others  that  prefer  to  have  their  creditors  at  a  dis- 
tance draw  on  them  for  the  amounts  due.  If  a  business  man  who  is 
accustomed  to  honor  drafts  continues  for  a  period  to  dishonor  them,  the 
banks  through  which  the  drafts  pass  conclude  that  he  is  unable  to  meet 
his  payments.  Circumstances  of  this  character  have  a  tendency  to  in- 
jure one's  credit.  The  messenger  from  a  bank  who  presents  a  sight 
draft  is  not  authorized  to  accept  a  check  in  payment,  but  the  person 
upon  whom  the  draft  is  drawn  may,  if  he  chooses,  write  across  the  face, 
"Accepted,  July  — ,  189-,  payable  at  First  National  Bank ,"  and  under 
this  write  his  name.  See  preceding  page.  Such  a  draft  is  then  really 
a  check — an  order  on  his  bank  to  pay  the  amount  due  for  him,  and  the 
particulars  must  be  entered  in  the  check  book  just  the  same  as  though 
an  actual  check  had  been  issued.  Some  houses  deposit  their  drafts  for 
collection  in  their  home  banks,  while  others  have  a  custom  of  sending 
them  direct  to  some  bank  in  or  near  the  place  where  the  debtor  resides.. 
If  the  place  is  a  very  small  one  the  collection  may  be  made  through  one 
of  the  express  companies. 

Draft   Notices. 

When  goods  are  sold  for  distinct  periods  of  credit  and  it  is  gen- 
erally understood  that  maturing  accounts  are  subject  to  sight  drafts, 
there  really  should  be  no  need  of  notifying  the  debtor  in  advance  of 
drawing.  Some  houses,  however,  make  a  general  custom  of  sending 
notices  ten  days  in  advance  stating  that  drafts  will  be  drawn  if  check  is 
not  received  in  the  meantime.  These  notices  may  be  often  seen  printed 
at  the  foot  of  statements  sent  out  on  the  first  of  the  month. 

When    are    accounts    due? 

Custom  has  made  some  rules  which  are  now  considered  absolute 
by  the  best  business  houses.  On  general  monthly  credit  accounts,  all 
goods  bought  during  the  month  are  due  on  the  first  day  of  the  month 
following  and  may  be  paid  any  time  between  the  first  and  the  tenth. 
Goods  sold  for  cash  should  be  paid  for  at  once  or  within  ten  days  from 
the  date  of  sale.  If  a  discount  is  allowed  for  cash  that  discount  can 
4 


40  BANKING,    COLLECTIONS, 


be  claimed  and  is  usually  allowed  if  payment  is  made  within  10  days, 
Goods  bought  on  March  3  at  30  days  would  be  due  April  3  plus  10 
days  or  April  13.  That  is  to  say,  if  a  discount  were  allowed  for  pay- 
ment within  30  days  the  discount  could  be  claimed  if  payment  were 
not  made  until  April  13.  It  is  a  common  custom  to  date  sales  ahead, 
to  the  first  of  the  next  month,  or  sometimes  two  or  three  months  ahead. 
The  dates  then  of  drafts  conform  to  the  general  custom  of  credits. 

Collections    through    Banks. 

If  you  desire  to  have  your  bills  receivable  and  commercial  drafts 
collected  through  a  bank,  you  should  place  them  with  the  bank  at  least 
fifteen  days  before  maturity.  About  ten  days  before  maturity  the  bank 
will  send  to  the  maker  a  formal  notice  stating  that  they  hold  a  note 
against  him,  giving  the  amount,  and  date  of  maturity,  and  asking  him 
to  call  and  pay  it.  When  a  note  is  lert  at  a  bank  for  collection,  it 

should  be  endorsed  "  Collected  for  account  of ."     By  this 

endorsement  the  note  is  not  transferred  to  the  bank.  The  bank  is 
simply  authorized  to  collect  the  amount. 

Three    Party    Draft. 

If  the  drawer  of  a  draft  owes  some  one  in  the  same  city  with  the 
person  upon  whom  he  draws,  that  is,  if  he  has  a  creditor  and  a  debtor 
in  the  same  city,  he  can  draw  on  the  debtor  in  favor  of  the  creditor 
and  forward  the  draft  by  mail  to  the  creditor.  The  creditor  will  de- 
posit it  for  collection  in  the  ordinary  way,  usually  after  endorsing  it. 

"No    Protest." 

We  often  see  attached  to  the  end  of  a  draft  a  little  slip  with  the 
words  "No  Protest ;  tear  this  off  before  presenting"  This  is  simply 
private  advice  to  the  banker  informing  him  that  the  drawer  does  not 
wish  to  have  the  draft  protested.  It  may  be  that'he  does  not  wish  to 
wrong,  or  injure  the  credit  of,  or  add  to  the  expense  of  his  debtor,  or 
it  may  be  that  he  considers  the  account  doubtful  and  does  not  wish  to 
add  to  his  own  loss  that  of  protest  fees. 

Discounting    Drafts. 

It  is  quite  a  common  thing  to  have  drafts  discounted  before  they 
are  accepted.  For  instance  a  wholesale  merchant  may  have  accounts 
out  amounting  to  $100,000  and  he  may  need  immediate  working  capital. 
He  draws  on  his  customers  and  sells  his  drafts  to  a  bank  either  directly 


AND  NEGOTIABLE  PAPER.  43 

or  through  a  note  broker.  The  amount  of  discount  depends  upon  the 
money  market.  The  drafts  are  as  good  as  one-name  notes.  Some  of 
them,  of  course,  will  be  dishonored,  but  these  are  met  by  the  drawer 
as  soon  as  returned,  or  he  may  set  aside  an  agreed  upon  percentage  of 
the  entire  amount  to  cover  the  drafts  likely  to  be  returned.  Drafts  at- 
tached to  bills  of  lading  ancl  other  securities  are  frequently  discounted 
when  placed  in  the  hands  of  the  bank.  Such  drafts  are  usually  drawn 
at  sight  or  at  one  day. 

The    Advantages    of    Taking    a    Note. 

It  is  generally  understood  that  a  debtor  is  more  likely  to  pay  a 
promissory  note  than  he  is  to  keep  a  simple  verbal  promise.  It  will  in- 
jure his  credit  if  he  allows  his  paper  to  go  to  protest.  It  is  difficult, 
too,  to  dispute  a  claim  after  a  note  has  been  given  in  settlement.  The 
note  may  be  used  by  the  creditor  in  raising  money  for  his  own  use,  that 
is,  he  may  get  it  discounted — sell  it  to  a  note  broker  or  to  a  bank.  But 
there  are  some  disadvantages.  If  a  note  is  accepted  from  a  debtor  the 
account  cannot  be  collected  until  the  day  of  maturity  of  the  note. 
You  may  hold  a  note  against  a  debtor,  and  if  your  note  is  not  due,  you 
cannot  by  any  process  of  law  prevent  your  debtor  from  selling  every- 
thing he  owns  and  leaving  for  parts  unknown.  A  note  that  is  overdue 
is  in  some  particulars  better  than  a  note  not  yet  matured.  An  overdue 
note  draws  interest  at  the  legal  rate  from  the  date  of  maturity  and  legal 
steps  to  collect  it  may  be  taken  at  any  moment. 

Discounting    Paper. 

To  discount  a  note  or  draft  is  to  sell  it  at  a  discount.  The  rates  of 
discount  vary  according  to  the  security  offered,  or  the  character  of  the 
loan,  or  the  state  of  the  money  market.  For  ordinary  commercial 
paper  the  rates  run  from  4  to  8  per  cent.  Notes  received  and  given  by 
commercial  houses  are  not  usually  for  a  longer  period  than  four  months. 

Drafts    and    Bills    of    Lading. 

The  use  made  of  commercial  drafts  in  connection  with  bills  of 
lading  is  quite  interesting.  For  instance,  the  live  cattle  are  paid  for  in 
Texas  by  the  proceeds  of  a  draft,  with  bill  of  lading  attached,  upon 
Chicago,  where  they  are  slaughtered.  Bills  of  lading  for  the  dressed 
beef  shipped  East  are  accompanied  by  drafts  on  New  York,  and  the 
shipment  per  steamer  to  Liverpool  or  Glasgow  is  drawn  against,  in 
sterling,  upon  London.  The  latter  draft  is  sold  to  a  New  Yt*k 


BANKING,    COLLECTIONS, 


banker,  who  in  turn 
draws  against  it  in  favor 
of  merchants  who  are 
buying  foreign  ex- 
changes. 

Protest    Notice. 

The  student  will  no- 
tice the  copy  of  a  protest 
notice — the  form  used 
by  notaries  in  Massachu- 
setts. An  illustration  is 
given  also  of  a  protested 
note  stamped  in  red  by 
the  notary.  The  num- 
ber is  the  clearing-house 
number  of  the  bank. 

Overdue    Paper. 

Negotiable  paper 
whether  made  for  ac- 
commodation or  other- 
wise may  be  transferred 
by  endorsement  and  de- 
livery or  by  delivery 
alone  either  before  it  has 
fallen  due  or  afterwards. 
There  is  a  difference, 
however,  in  the  liability 
attached  to  endorsers, 
and  the  value  of  the 
paper  may  be  effected 
by  the  defences  existing 
between  the  original 
parties.  It  would  be 
well  to  consult  a  lawyer 
before  accepting  over- 
due paper,  particularly 
if  it  has  endorsers. 


AND   NEGOTIABLE  PAPER. 


45 


Who    is    a    hoiia    fide    holder? 

If  the  endorsee  or  holder  of  a  note  has  no  notice  at  the  time  he 
receives  it,  of  any  facts  or  circumstances  that  would  prevent  any  of  the 


L  VERNON  8RIGGS,  Notary  Public. 

©ommotm>eatth  of 


County 


U.  S.  PASSPORTS. 


...fit  da«/ nefatS,  tee-a+tinf  ArrymtH-S. 


I,  /  have  hereunto  set  my  hand  and  affixed  my  Notarial 
Sea/,  the  day  and  year  f  rat  above  written. 


(Noting   Non   Acceptance, 

J  Postage,  Trarel  and  Expense, 

j  Protesting  for  Non  Payment, / 

I  Postage,  Trarel  and  Expense, 


(  Notary 
|  Public. 


parties  to  the  paper  before  him  from  recovering  the  whole  amount,  he 
is  a  bona  fide  or  innocent  holder,  and  if  he  has  paid  for  the  note,  he 
is  a  holder  for  value,  and^can  recover  its  full  face.  An  alteration  or. 


BANKING,    COLLECTIONS, 


change  in  some  material  part  of  a  promissory  note,  by  a  party  to  it. 
makes  the  paper  void  as  regards  all  parties  except  those  who  assent  to 
the  change.  Adding  an  interest  rate  is  a  change. 

A    Set-on^ 

If  a  man  has  a  claim  against  you  and  you  have  also  a  claiit.  against 
him,  you  call  your  claim  a  set-off,  that  is,  something  to  set  or  cancel 
off  part  or  all  of  his  claim.  Under  ordinary  conditions  it  is  impossi- 
ble to  have  a  set-off  against  a  note  not  in  the  hands  of  the  original 
payee. 

Notice    of    Non-payment    of    a    Note. 

If  the  note  has  been  discounted  or  is  in  a  bank  for  collection,  the 
bank  will  send  notice  to  the  endorsers  to  the  effect  that  the  note  has  been 
presented  for  payment  and  payment  was  refused.  If  the  note  is  in  the 
maker's  hands  and  payment,  upon  presentation,  has  been  refused,  the 
maker  should  immediately  send  a  written  notice  to  the  endorser,  if 

any,  stating  that  a  certain  note  made  by ,  for —     — ,  in  favor  of 

dated ,  and   "by  you  endorsed  "  was  this  day  presented 

to for  payment  and  payment  was  refused.     Such  notice  may  be 

sent  by  mail. 

A    "Mark"    Signature. 

When  a  man  who  cannot  write  is  asked  to  sign  a  deed  or  mortgage 
or  other  legal  docu- 
ment, the  usual  cus- 
tom is  to  have  him 
affix  a  cross  as  in  the 
illustration,  some  one 
doing  the  writing  for 
him.  Such  a  signa- 
ture should  be  wit- 
nessed. See  illustra- 
tion. An  endorse- 
ment of  this  kind  is 
legal  and  is  quite 
common.  There  are  no  legal  rules  governing  the  shape  of  the  mark. 

An    Important   Provision. 

A  very  important  provision  of  the  national  bank  act  is  as  follows 


AND  NEGOTIABLE   PAPER.  47 

"No  bank  shall  loan  or  discount  on  the  security  of  shares  in  its  own 
capital  stock  unless  such  security  or  purchase  shall  be  necessary  to  pre- 
vent loss  upon  a  debt  previously  contracted  in  good  faith." 

The    Name    "Bank." 

In  some  of  the  states  the  title  Bank  can  be  lawfully  used  by  any 
one ;  in  other  states,  for  instance,  New  York  and  Massachusetts,  the 
title  Bank  can  be  used  only  by  duly  incorporated  banks  which  are  or- 
ganized and  conducted  under  the  provisions  and  restrictions  of  the 
State  banking  laws. 

Fower   of   Attorney'. 

To  give  some  one  else  the  power  to  sign  or  endorse  checks,  notes, 
or  other  important  papers,  is  called  giving  such  an  one  power  of  attor- 
ney, that  is,  the  power  or  authority  to  be  your  attorney.  Such  author- 
ity when  given  should  be  in  writing  and  have  a  witness  and  should 
state  explicitly  what  the  attorney  has  power  to  do.  The  post-office 
department  issues  a  printed  blank  for  use  by  those  who  wish  to  transfer 
to  others  the  power  to  sign  money  orders.  Powers  of  this  sort  should 
be  filed  with  the  post-office,  or  bank  interested,  or  should  be  made  mat- 
ters of  public  record  at  the  offices  of  the  register  of  deeds.  The  reader 
will  find  on  the  next  page  a  power  of  attorney  from  Daniel 
Webster  to  Mrs.  Webster  giving  her  authority  to  draw  and  sign 
checks.  This  document  appeared  some  time  ago  in  Rhodes  Journal  of 
Banking  and  was  taken  from  the  files  of  the  bank  .where  it  was  actually 
used  by  Mrs.  Webster. 

The    Return    of    Vouchers. 

Banks  usually  return  to  promisors  and  acceptors,  all  the  paper 
which  they  have  collected.  When  you  pay  a  note  or  draft  you  expect 
to  receive  the  cancelled  note  or  draft  in  exchange  for  the  money  which 
you  pay.  In  the  same  way  paid  checks  are  returned  to  the  drawers  of 
them,  at  the  end  of  each  month.  This  rule  is  not  generally  followed, 
however,  between  banks  and  their  correspondents.  The  cancelled  note 
or  draft  which  you  receive  should  not  be  destroyed.  It  may  serve  as 
an  important  voucher.  A  good  plan  is  to  tear  the  signature  through  the 
middle  and  destroy  the  torn  off  piece.  The  note  is  then  destroyed  as 
a  credit  instrument  but  remains  sufficiently  complete  to  serve  as  a 
voucher, 


48 


BANKING,    COLLECTION, 


Due    Bills. 

A  due  bill  is  an  acknowledgement  and  evidence  of  a  debt.  It 
may  be  payable  in  money  or  in  merchandise.  The  ordinary  form  of 
due  bill  is  not  negotiable. 


Hour   Notes    differ    from    other    Contracts. 

There  are  three  peculiarities  which  distinguish  promissory  notes 
from  ordinary  written  contracts,  i.  Notes  are  negotiable.  2.  There 
is  no  statement  in  a  note  of  consideration.  3.  There  are  no  days  of 


AND  NEGOTIABLE  PAPER.  49 

grace  allowed  on  ordinary  contracts.  A  note  must  have  a  clear  promise 
to  pay,  without  any  attached  conditions.  The  time  must  be  certain, 
that  is,  it  must  not  depend  upon  the  happening  of  some  uncertain  event. 

Legal    Tender. 

In  making  money  payments  it  is  necessary  often,  or  if  the  receiver 
demands  it,  to  make  payment  in  legal  tender,  that  is,  in  the  form  of 
money  required  by  law.  For  instance  you  cannot  pay  an  account  of 
$18  in  ten-cent  pieces,  if  the  creditor  refuses  to  accept,  for  the  reason 
that  silver  coin  of  smaller  denomination  than  one  dollar  are  legal  tender 
in  all  sums  not  exceeding  $10. 

Clearing-house    Management. 

The  bank  clerks  who  attend  to  the  clearing-house  business  must  be 
experts  in  their  special  work.  The  slightest  error  on  the  part  of  one 
clerk  may  prolong  indefinitely  the  entire  settlement.  As  a  check  against 
error  very  severe  rules  are  established.  The  following  are  samples  from 
the  by-laws  of  a  large  clearing-house: 

1.  For   disorderly  conduct  of  any  clerk,  or  other  officer,  at  the 
clearing-house,  or  disregard  of  the  manager's  rules  and  instructions, 
for  each  offense,  $4.00. 

2.  For  any  officer  failing  to  attend  punctually  at  the  hour  for  mak- 
ing the  exchanges,  $4.00. 

3.  Debtor  banks,  failing  to  appear  to  pay  their  balances  before  a 
quarter  past  12  o'clock,  $3.00. 

4.  Any  error  in  the  credit  ticket  (that  is  the  amount  brought), 

$2.00. 

5.  Errors  in  making  the  balance  ticket  (that  is,  the  amount  re- 
ceived) entries  $2.00. 

6.  Failing  to  deliver  check  tickets  before  half-past   ten   o'clock, 
$1.00. 

7.  All  other  errors,  $2.00. 

Any  clerk,  or  other  officer,  who  shall  repeatedly  and  perseveringly 
disobey  the  orders  or  instructions  of  the  manager,  shall,  with  the 
approbation  of  the  clearing-house  committee,  be  expelled,  and  not  re- 
admitted without  the  written  consent  of  the  committee.  Thirty 
minutes  will  be  allowed  for  the  morning  business  settlement,  and  for 
each  additional  fifteen  minutes  detention,  $2  will  be  added  to  the  fine 
under  No.  5. 

The  following  selections  from  the  general  rules  of  the  same  clear- 


50  BANKING,    COLLECTIONS, 


ing-house  will  give  the  reader  some  idea  of  the  exacting  character  of 
clearing-house  regulations: 

Errors  in  the  exchanges  and  claims  arising  from  the  return  of 
checks  or  other  cause  are  to  be  adjusted  directly  between  the  banks 
which  are  parties  therein,  and  not  through  the  clearing-house. 

Whenever  checks  which  are  not  good  are  sent  through  the  clear- 
ing-house they  shall  be  returned  by  the  banks  receiving  the  same  to  the 
banks  from  which  they  were  received  as  soon  as  it  shall  be  found  that 
said  checks  are  not  good;  and  in  no  case  shall  they  be  retained  after 
one  o'clock. 

The  manager  shall  immediately  report  to  the  clearing-house  com- 
mittee any  apparent  irregularity  in  the  dealings  of  any  bank  belong- 
ing to  the  association  that  comes  to  his  notice,  and  receive  the  in- 
structions of  the  committee  in  regard  thereto. 

The  committee  shall  have  power  to  remove  the  manager  or  any 
of  the  clerks,  whenever,  in  their  opinion,  the  interests  of  the  associa- 
tion shall  require  it. 

The  hour  for  making  the  exchanges  at  the  clearing-house  shall  be 
ten  o'clock  A.  M.  each  day.  At  a  quarter  past  twelve  o'clock,  noon, 
the  debtor  banks  shall  pay  to  the  manager,  at  the  clearing-house,  the 
balances  due  from  them  respectively  either  in  coin  or  in  such  other 
currency  as  the  laws  of  the  United  States  shall  require,  or  in  such  cer- 
tificates as  shall  be  authorized  by  the  clearing-house  association,  ex- 
cepting sums  less  than  one  thousand  dollars,  which  may  be  paid  in 
bills  of  the  debtor  bank. 

At  half-past  one  o'clock  P.  M.  the  creditor  banks  shall  receive 
from  the  manager  t  at  the  same  place  the  balances  due  to  them  respec- 
tively ;  provided  all  the  balances  due  from  the  debtor  banks  shall  then 
have  been  paid  to  him. 

Should  any  bank  fail  to  pay  the  balance  due  from  it  at  the  proper 
hour  the  amount  of  such  balance  shall  be  immediately  furnished  to  the 
clearing-house  by  the  several  other  banks  in  proportion  to  their 
respective  balances  against  the  defaulting  bank  resulting  from  the  ex- 
changes of  that  day. 

Foreign   Clearing-houses. 

England  has  three  bank  clearing-houses  and  France  one.  The 
clearing  principle  is  used  in  England  to  adjust  the  complicated  accounts 
of  the  through  traffic  of  connecting  railroads,  and  to  simplify  the  fort- 
nightly deliveries  of  stock  on  the  London  Stock  Exchange.  Every 


AND    NEGOTIABLE   PAPER.  51 

clearing-house  bank  in  London  and  the  clearing-house  itself,  keep  ac- 
counts with  the  bank  of  England,  and  differences  are  settled  by  trans- 
fers from  one  account  to  another.  London  originated  the  clearing- 
house. It  was  formed  spontaneously  by  the  clerks  of  the  London 
private  bankers,  who,  to  save  themselves  the  trouble  of  going  about  to 
each  bank,  got  into  the  habit  of  meeting  in  a  central  room  to  settle 
their  mutual  claims.  A  similar  practice  arose  among  French  merchants, 
in  old  times,  of  making  their  bills  payable  at  the  great  annual  fair  in 
Lyons,  where  they  met  to  balance  their  debts,  and  pay  the  differences. 
If  gold  were  to  be  used  instead  of  the  clearing-house  machinery  in  either 
New  York  or  London,  the  weight  to  be  moved  every  day  over  long 
distances  would  exceed  200  tons.  The  clearing-house  establishes  a 
fellowship  among  banks  that  has  already  proved  in  times  of  money 
panics,  of  the  greatest  service  to  themselves  and  the  community. 

Hints    for    Depositors* 

Do  not  wait  until  you  get  to  the  bank  to  count  your  money,  or  to 
endorse  your  checks  and  arrange  your  deposit.  This  should  be  done 
before  you  come  to  the  bank,  or  at  least,  before  you  present  yourself 
at  the  receiving  teller's  window.  Be  sure  that  you  have  the  figures 
correct.  Place  the  bills  all  one  way,  right  side  up.  Separate  your  gold 
and  silver,  and  sort  the  silver  by  denominations.  Do  not  deposit  your 
dimes,  nickels,  and  pennies  until  you  have  a  certain  amount  of  them, 
say  five  dollars  of  each ;  then  put  them  in  a  package,  with  the  amount 
and  your  name  marked  on  it,  and  leave  for  the  teller  to  count  at  his 
leisure,  with  the  understanding  that  if  short  or  over  the  proper  correc- 
tion will  be  made. 

Borrowing    from   Banks. 

It  is  the  business  of  a  bank  to  loan,  money  to  responsible  persons, 
within  reasonable  limits.  The  regular  customer  of  the  bank  is  entitled 
to  and  will  receive  the  first  consideration  if  the  demand  is  larger  than 
the  bank  can  safely  meet.  A  business  man  should  not  hesitate,  when 
occasion  requires,  to  offer  his  bank  any  paper  he  may  want  discounted, 
if  in  his  opinion  it  is  good,  nor  should  he  be  offended  if  his  banker 
refuses  to  take  it,  even  without  giving  reasons.  Make  your  own  notes 
and  acceptances  payable  at  your  bank.  Keep  a  careful  record  of 
the  dates  of  maturity  of  all  paper  which  you  make  or  endorse.  It  is 
usually  better,  that  is,  more  convenient  tc  the  holder,  to  pay  your  note 
early  on  the  day  it  falls  due,  rather  than  a  day  or  two  before. 


BANKING,    COLLECTIONS, 


Rates    for    Loans. 

In  loaning  money  on  demand,  when  it  is  strictly  understood  be- 
tween bank  and  borrower  that  the  money  so  advanced  is  positively 
minute  money  —  money  returnable  at  any  minute,  when  the  bank  calls 
for  it  —  banks  usually  charge  low  rates  of  interest..  When  interest  rates 
are  high,  bankers  prefer  to  deal  in  long-time  paper.  This  general  rule 
is  reversed  when  the  situation  is  reversed.  Bankers  aim  also  to  scatter 
and  locate  their  maturities  so  that  as  the  seasons  roll  around,  they  will 
not  have  very  large  amounts  maturing  at  one  time  and  very  small 
amounts  at  another.  They  plan  also  to  be  "  in  funds  "  at  those  seasons 
when  there  is  always  a  large  and  profitable  demand  for  money.  For 
instance  in  the  centers  of  the  cotton  manufacturing  interest  the  banks 
count  on  a  large  demand  for  money  between  October  and  January  when 
the  bulk  of  the  purchases  to  supply  the  mills  are  made  ;  again,  among 
those  who  operate  and  deal  in  wool  there  is  an  active  demand  for  money 
in  the  wool  clip  in  the  spring  months.  The  wheat  and  corn  crops  are 
autumn  consumers  of  money.  Midwinter  and  midsummer  in  the 
north  are  usually  periods  of  comparative  stagnation  in  the  money 
market.  All  these  things  affect  rates,  and  the  successful  banker  is  he 
who  from  observation  and  large  experience  shows  the  most  skill  in 
timing  his  money  supply. 

When    Interest  Accrues* 

There  are  certain  well-defined  principles  which  make  clear  when 
interest  is  accruing  and  when  it  is  not.  Money  voluntarily  left  by  any 
one  in  the  hands  of  another  will  not,  of  course,  draw  interest  unless  a 
specific  mutual  agreement  to  that  effect  is  made.  In  most  cases,  a  de- 
mand note  bears,  interest  even  though  there  be  no  statement  to  this 
effect*  on  the  face  of  the  note.  Money  on  deposit  in  a  bank  without  an 
agreement  to  pay  interest  will  not  accumulate  interest  even  though  it 
remain  fifty  years. 

Forged   Endorsements. 

A  bank  is  supposed  to  know  the  signatures  of  its  depositors,  it  is 
one  of  its  first  and  most  important  duties  to  have  them  on  file  and  im- 
mediately accessible  by  the  use  of  a  well-kept  signature  book.  Holders 
of  checks,  in  very  many  cases,  know  nothing  about  these  drawer-signa- 
tures. They  have  taken  them,  supposing,  of  course,  that  they  are; 
genuine.  When  they  have  collected  the  checks  at  the  banks  upon 
which  they  are  drawn  they  are  to  a  very  great  extent  relieved  of  all 


AND  NEGOTIABLE  PAPER.  53 

further  responsibility  as  to  the  signatures  of  the  signers,  for  the  bank  by 
paying  them  has  guaranteed  their  genuineness.  But  the  bank  which 
cashes  for  a  good  holder  a  much -endorsed  check,  the  signature  of  which 
is  all  right,  generally  knows  nothing  about  its  many  endorsements  be- 
yond the  fact  that  they  seem  to  be  all  right  and  stand  there  in  regular 
order,  apparently  correctly  made.  For  the  honesty  and  genuineness 
of  these  many  or  few  preceding  endorsements  the  last  holder,  for  whom 
the  check  is  cashed,  whether  he  endorse  the  check  or  not,  is  fully  and 
legally  held,  and  no  reasonable  lapse  of  time  before  a  discovery  of  the 
forgery  is  made  will  relieve  him  of  this  liability. 

Trust    Companies. 

The  ordinary  trust  company  with  which  city  people  are  familiar  is 
very  similar  in  its  management  to  a  national  bank.  They  invest  their 
deposits  and  capital  in  the  same  class  of  securities,  and  they  are  equally 
careful  and  conservative  in  the  matter  of  their  loans.  They  receive 
money  on  deposit  subject  to  checks  and  allow  interest  on  deposits  which 
exceed  a  nominal  sum — usually  from  $300  to  $1,000.  They  are  organ- 
ized under  and  are  subject  to  state  laws.  They  have  connection  with  the 
clearing-houses  either  direct  or  through  some  convenient  national  bank. 
They  are  in  form  of  organization  very  similiar  to  the  great  joint-stock 
banks  of  England.  They  are  usually  authorized  to  receive  and  hold 
moneys  and  property  in  trust  and  on  deposit  from  courts  of  law  or  equity, 
executors,  administrators,  assignees,  guardians,  trustees,  corporations, 
and  individuals,  and  may  be  appointed  by  probate  courts  trustees  under 
any  will,  upon  such  terms  and  conditions  as  may  be  agreed  upon. 
They  act  as  trustees  for  widows  or  children,  take  charge  of  and  man- 
age property,  and  collect  interest  and  rent.  They  act  as  transfer  agents 
for  railroad  and  other  stock,  and  as  agents  for  the  purpose  of  issuing, 
registering,  or  countersigning  the  certificates  of  stock,  bonds,  or  other 
evidences  of  debt,  and  for  the  payment  of  dividends.  They  act  as 
agents  or  attorneys  for  the  care  and  management  of  invested  property. 

Safe    Deposit    Vaults. 

Many  of  the  banks,  trust  companies,  and  insurance  companies 
make  a  special  feature  of  renting  small  safe  deposit  boxes  or  drawers  in 
their  vaults  to  any  and  every  person  who  chooses  to  pay  the  rent  asked, 
which  depends  largely  on  the  amount  of  space  needed  and  is  usually 
$10  for  the  smallest  sized  box.  It  is  very  convenient  for  one  who  has 
not  a  safe  of  his  own  to  have  a  secure  place  in  which  to  keep  valuable 


54  BANKING,    COLLECTIONS, 

papers.  In  many  of  the  larger  safe  deposit  vaults  there  are  desks  and 
stationery  for  customers  so  that  one  may  at  any  time  and  very  conven- 
iently and  privately  examine  one's  papers  and  make  entries  or  endorse- 
ments, or  add  new  vouchers,  or  make  changes,  as  the  occasion  may 
require. 

A   Depositor's    Credit. 

As  a  rule,  banks  do  not  make  known  even  to  a  single  individual  the 
extent  of  a  customer's  business  or  the  size  of  his  bank  account.  How- 
ever any  shareholder  in  a  bank  has  a  right,  as  one  of  the  proprietors, 
to  examine  the  books,  so  long  as  such  examination  is  not  an  unreason- 
able interference  with  the  regular  routine  of  work,  and  it  is  pretty  gen- 
erally known  that  a  large  depositor  can  either  directly  or  through  some 
other  bank  get  at  the  condition  of  a  small  depositor's  account. 

Giving    Bonds    for    Faithful    Service. 

Bank  clerks  and  officers  are  usually  required  to  give  bonds,  that  is, 
they  must  get  some  person  to  go  their  suretyship,  thus  guaranteeing 
faithful  service,  and  agreeing  to  make  good  any  losses  caused  by  defal- 
cation or  carelessness.  There  are  now  several  surety  companies  that 
give  bonds  for  everyone  and  anyone  whom  they  consider  a  "good 
risk  "  upon  the  payment  of  certain  premiums  as  in  insurance.  If  a 
young  man  is  an  applicant  say  for  a  cashier's  position  in  a  mercantile 
house  and  the  house  requires  that  some  one  give  a  bond,  that  is,  go  his 
surety  for  $10,000,  and  the  young  man  has  no  rich  father  or  uncle  to 
guarantee  the  house  against  loss,  he  applies  to  a  bond  insurance  com- 
pany and  if  his  record  and  habits  are  good  he  has  no  difficulty  in 
securing  the  necessary  papers.  The  amount  of  the  bond  required  de- 
pends upon  the  importance  of  the  position  applied  for.  Presidents  of 
banks  do  not  usually  give  bonds.  The  bonds  of  personal  friends  have 
always  a  good  deal  of  moral  weight  and  force  and  for  this  reason  are 
considered  superior  to  the  bonds  granted  by  a  guarantee  company. 
Such  a  bond  is  really  a  testimonial,  and  the  last  one  that  is  likely  to  be 
violated.  The  record  shows  that  marvelously  few  employees  have  vio- 
lated such  bonds.  The  guarantee  companies  look  into  a  man's  stand- 
ing very  thoroughly  before  taking  the  risk  of  becoming  his  surety. 
When  an  application  is  made  three  references  are  given  and  the  com- 
pany corresponds  with  the  persons  whose  names  are  given  as  references 
and  asks  a  great  many  very  pointed  questions.  A  young  man  with  good 
social  standing  can  secure  bonds  for  five  or  ten  thousand  dollars  by  trie 
payment  of  a  small  annual  premium. 


AND    NEGOTIABLE   PAPER.  55 


Know  all  Men  by  these  Presents, 

That  we, £2firewiy  ctfj-ivw-ii as  principal,  and  .....Ci 

Sp^-24 €%>mz    £2/rew'i-'?4-  ^J/^/fWt/f?^ as   sureties,  are  holden 

and  stand  firmly  bound  unto 

Tie  Royal  Exchange  Bank,  of  New  York, 

in  the  sum  of Q^K-K,  d^S^w^^*/ dollars 

to  be  paid  unto  the  said 


f 
Whereas,  the  said  <2trewi.-™-  ^'Ww^z has  been  duly 

appointed  to  the  office  of ^C«4m**;..-...Of  the  bank  aforesaid,  by 

the  Directors  thereof,  and  has  signified  his  acceptance  of  the  said 
appointment : 

Now  the  condition  of  this  Obligation  is  such,  That  if 

the   said ^^re^ii-if  c%jt&'iwi shall    faithfully  discharge  the 

duties  of  his  said  office  and  all  other  duties  that  are,  or  may  here- 
after be,  prescribed  by  the  President  and  Directors,  for  and  during 
the  term  for  which  he  has  been  ^  elected,  and  for  and  during  such 
term  of  time  as  he  may  continue  therein,  by  any  re-election  or 
otherwise,  then  this  obligation  shall  be  void,  but  otherwise  shall  re- 
main in  full  force. 

It  is,  however,  understood,  that  in  case  of  the  death  of  either 
of  the  above-named  sureties,  or  in  case  either  of  the  above-named 
sureties  shall  at  any  time  give  notice  in  writing,  to  the  President  or 
Directors,  for  the  time  being  that  he  does  not  wish  to  be  held  any 
longer  responsible  on  this  obligation,  thereupon  both  of  the  above- 
named  sureties  shall  be  discharged  from  liability  on  account  of  any 
default  of  the  said  principal  which  may  occur  after  thirty  days  from 
and  after  the  notice  of  such  death,  or  of  such  wish  to  be  discharged 
as  aforesaid. 

Signed  and  sealed  in  the  presence  of 


Witnesses  :    « 


Qavned  ^asM (SEAL.) 


BANKING,    COLLECTIONS, 


Use    of  Instruments    of   Credit. 

All  the  wholesale  transactions  and  a  large  part  of  the  retail  trans- 
actions are  completed  by  the  passing  of  instruments  of  credit — nego- 
tiable titles :  notes,  drafts,  checks,  etc. ;  a  part  of  the  retail  trade  only 
is  conducted  by  what  is  called  cash,  that  is,  actual  bills  and  small 
change.  It  is  the  function  of  banks  to  deal  with  these  transferable 
titles.  Banks  deal  to  a  very  small  extent  in  actual  money.  The  notes, 


Loan  Committee  of  the  New  York  Clearing  House  Association. 


This  Certifies,  that  the. 


has    deposited    with    this    Committee,   securities    in    accordance    with    the    proceedings   of 
a    Jfeetiny   of    the   Association,    held   June    JOth.     1893.    upon    which    this    Certificate    ta 

j"or"<A«    su^.    of     TWENTY    THOUSAND    DOLLARst'/rom     anu     Member    of    the    Clearing 
House.   Association. 


On  it*  w.r,M« 


4-  +   + 


drafts,  bills  of  exchange  and  bank  deposits  are  representative  of  the 
property  passing  by  title  in  money  from  the  producers  to  the  consumers. 
A  small  proportion,  perhaps  six  or  eight  per  cent.,  of  these  transactions, 
is  conducted  by  the  use  of  actual  bank  or  legal  tender  notes.  This 


$10.00 

To  either  of  the  MERCH 
deliver  to  the  Bearer.  GOODS 


Collected  by  any  Bank  in  T< 


NorOi  fldams.  Mass.  August  IS.  1893. 

[ESMEN  of  North  fldams.    Please 
R  MONEY  10  the  va)ue  of 
ill  be  received  on  DeposiV  or 


ARNOL?D  PRINT  WORKS. 
•          •  • 


trade  in  instruments  of  credit  amounts  to  nearly  fifty  billions  of  dol- 
lars yearly.  The  losses  through  mercantile  failures  rarely  exceed  one 
hundred  millions  a  year,  that  is  one  dollar  in  every  five  hundred,  or 
one-fifth  of  one  per  cent,  of  the  gross  amount  of  business. 


AND    NEGOTIABLE   PAPER. 


57 


Emergency    Currency. 

Some  samples  are  given  here  of  the  emergency  currency  of  1893. 


Beginning  in  August  and  within  a  single  month  a  currency  famine  due 
to  a  variety  of  causes  became  general.     The   banks   ceased   to  loan 


•  ft  v 

m 


I 


$5. 


BUFFALO..__ 


1893. 


-1352     MARINE  BANK 

Pay  to  Bearer  FIVE  DOLLARS  through  the  But- 

falo  Clearing  House  and  charge  to  pay-roll  account  of 

•  •  -     •      •    .  * 


Certified  by 
The 


money,  many  of  them  fearing  "a  run."     Interest  reached  20,  50,  and 
loo  per  cent.     The  banks  of  one  city  refused  to  accept  drafts  on  an- 


other.     Some  hundreds  of  banks  were  compelled  to  close  their  doors. 
The  country  had  been  doing  ninety  per  cent,  of  its  business  upon  credit 


58 


BANKING,    COLLECTIONS, 


instruments — not  actual  money,  and  when  these  instruments  were  re- 
fused a  financial  panic  was  the  result.  Men  preferred  currency  in  hand 
to  the  best  kind  of  credit  account,  and  as  a  result  the  actual  money  was 
locked  up  in  private  vaults.  Currency  became  so  scarce  that  it  had  to 
be  bought  as  merchandise  at  a  heavy  premium.  Merchants  were  forced 
to  send  by  express  the  actual  bills  to  meet  distant  accounts  and  to  pay 


the  expenses  of  their  families  at  the  summer  resorts.  Checks  were  use- 
less away  from  the  banks  upon  which  they  were  drawn.  More  than 
$300,000,000  was  withdrawn  from  the  banks  and  hoarded  by  the  own- 
ers. This  situation  brought  into  local  circulation  several  forms  of  cur- 
rency— credit  instruments — which  were  decidedly  unique.  The  most 


THIS  IS  TO  CERTIFY,  THAT THCNC  MAS  SCCN  OCPOSITCO  IN  THIS  BANK  jn^E 
rms  CMTiriCATi.  iNCURNCNTruNos  FOUR  MONTHS  mom  OATC. 

«.  Auo.  19. 1893.  SOUTH    CHATTA 


THIS  CcftTiriCATC  WILC  me  NCCCIVCO  OH  OCPOSIT.  ojOTlWI*®^ *NV  OCBT  °"  OSI.IGATION  TO  THE 

PIRST    NATIONAL    BANK,           lS^S^S:lTI2ENS  BANK  &  TRUST  CO- 
THIRD    NATIONAL    BANK,           ^SJLJL/jSrW'^"1-'  PROBASCO  &  CO.. 
CHATTANOOGA  NATIONAL  BANK7^53P^  CHATTANOOGA  SAVINGS  BANK. 
— r SOUTH  CHATTANOOGA  SAVINGS  BANK. 

TNI*  CCMTiriCATC  I*  SCCUMCO  •»  TMC  OCFOSIT  Of  A^mOWCO  •CCUHITIfS  IN  TMl  HANDS  Of  T    G.   MONTAGUC.  PRtS« 

J«,'HT  FiMtT  NATIONAL  BANK.  »»  CUSTODIAN  TO  uoui1  •  THC  AMOUNT  «n.  SUCH > 


CHATTANOOaA  ClC 


common  of  these  were  the  emergency  clearing-house  certificates,  their 
object  being  to  extend  indefinitely  the  brief  term  of  mutual  credit  in- 
volved in  all  clearing-house  settlements.  They  were  in  reality  not  used 
as  currency,  but  their  effect  was  to  add  their  face  value  to  the  volume 
of  currency  in  circulation,  by  releasing,  for  use  outside,  that  which 
would  otherwise  have  been  reserved  for  clearing-house  settlements.  In 


AND   NEGOTIABLE  PAPER.  59 

each  instance  the  use  of  the  certificates  was  limited  strictly  to  settle- 
ment of  mutual  accounts  between  members  of  the  particular  clearing- 
house association  issuing  the  certificate.  The  certificates  were  issued 
to  banks  upon  securities  which  they  furnished.  Note  the  reading  on 
the  New  York  certificate,  an  illustration  of  which  is  given.  Other  de- 
vices of  similar  character  were  clearing-house  due  bills.  These  stated 
that  a  certain  sum  was  due  by  a  particular  bank  to  some  other  bank  or 
to  the  order  of  some  individual  and  usually  had  the  following  additional 
wording  :  This  due  bill  is  only  good  when  signed  by  one  and  counter- 
signed by  ajiother  authorized  person,  and  is  payable,  only  in  the  ex- 
changes through  the  clearing-house  the  day  after  issue.  Another  expe- 
dient favored  in  all  parts  of  the  country,  was  the  sale  by  banks  of  cer- 
tified checks  against  themselves  for  currency  denominations,  which 
when  signed  by  the  purchaser,  were  used  by  him  as  currency.  Most 
generally  used  of  all,  however,  were  pay  checks  in  currency  denomina- 
tions, which  in  scores  of  manufacturing  towns,  were  the  only  currency 
that  was  available  for  weekly  payments  and  cash  purchases  by  wage- 
earners.  In  addition  to  these  well  defined  classes,  there  were  others  so 
varied  that  but  a  suggestion  of  them  can  be  made — negotiable  certifi- 
cates of  deposit;  ninety-day  and  other  short  time  paper  in  currency 
denominations;  bond  certificates;  grain  purchase  notes;  credit  and 
corporation  store  orders ;  improvement  fund  orders ;  teachers'  warrants ; 
shingle  scrip,  etc.  In  every  case  where  the  associated  banks  of  a  sec- 
tion failed  to  supply  the  needed  currency,  individuals  and  corporations 
were  compelled  to  resort  to  extraordinary  devices.  This  illegal  bank- 
note currency  was  accepted  by  the  community,  the  financial  conditions 
became  normal  again,  and  every  credit  instrument  was  made  good  in 
actual  money. 

Defalcations    and    Embezzlements. 

An  experienced  banker  offers  the  following  suggestions  to  prevent 
defalcations  and  embezzlements  through  the  manipulating  of  the  bank's 
record  books  :  Secure  clerks  of  high  character  and  integrity  and  have 
a  proper  system  of  accounts  with  a  perfect  system  of  checking  every- 
thing. If  possible  keep  accounts  in  duplicate.  The  balance  ledger ^ 
can  be  proved  to  a  cent  every  day,  and  this  should  certainly  be  done. 
When  practicable,  it  is  better  to  have  all  differences  investigated,  and 
reported  upon  by  some  one  who  is  not  directly  responsible.  A  number 
of  banks  in  the  large  cities  have  created  the  position  of  auditor  of  ac- 
counts, and  it  is  one  o£  his  duties  to  report  to  the  cashier  direct  upon 


BANKING,    COLLECTIONS, 


all  differences.  This  auditor  reconciles  accounts-current  with  out-of- 
town  correspondents,  balances  and  delivers  all  pass-books,  and  furnishes 
information  to  all  depositors  respecting  their  accounts.  A  great  benefit 
is  secured  to  a  bank  by  the  examination  of  one  man's  work  by  another. 
Pass-books  of  active  accounts  should  be  written  up  once  a  month,  and 
no  pass-book  should  run  longer  than  two  months  before  being  balanced. 
It  should  be  a  rule  in  every  bank  that  no  charge  entry  should  be  put 
through  the  books,  except  from  a  proper  voucher,  that  is,  a  check  signed 
by  a  depositor,  or  a  charge  ticket  made  out  and  signed  by  an  officer  of 
the  bank.  The  discount  clerk  and  the  collection  clerk  should  not  be 
the  same  person,  and  neither  of  them  should  be  the  corresponding 
clerk.  The  monthly  accounts-current  rendered  by  a  city  correspondent 
should  be  reported  upon  promptly,  and  any  disposition  on  the  part  of 
the  bookkeeper  to  delay  or  neglect  this  matter  should  be  corrected.  A 
very  important  requisite  in  modern  banking  is  a  system  of  thorough 
examination  at  irregular  intervals.  No  teller,  bookkeeper,  or  other 
clerk  can  suffer  the  slightest  harm  from  having  his  cash  and  books  ex- 
amined and  found  correct.  All  notes  held  for  collection  should  be  ac- 
counted for,  and  balances  due  from  other  banks  for  collections,  should 
be  verified.  Special  deposits  of  securities  held  for  safe-keeping  should 
be  examined  occasionally.  The  more  complex  the  bookkeeping  the 
easier  it  is  to  "  cook  "  the  accounts. 

A  rare  Bank  Note. 

The  photo-copy  of  the  $2-note  here  given  is  a  good  sample  of  the 
old  style  state  bank  notes  in  circulation  sixty  or  seventy  years  ago.  The 
note  reproduced  here  is  the  property  of  Mr.  John  A.  Kennedy,  cashier 
of  the  Niagara  Bank  of  Buffalo.  He  considers  it  worth  $1,000. 

Foreign  and  Domestic   Commercial   Credit. 

It  is  to  credit  alone  that  we  are  indebted  for  that  intermediate 
agent  which  plays  so  important  a  part  in  the  transaction  of  business, 
whether  it  be  in  causing  supply  and  demand  to  meet,  or  in  applying  to 
the  industry  of  exchange  the  principle  of  the  division  of  labor  which 
is  so  favorable  to  production.  Without  credit  this  intermediary  is  im- 
possible in  most  instances.  It  gives  birth  to  both  industry  and  trade. 
It  multiplies  the  producing  and  consuming  power  of  society  ;  by  facili- 
tating exchange  it  accelerates  and  increases  it.  In  reality  the  largest 
share  of  the  business  of  the  world  is  done  on  a  credit  basis.  In  many 
instances  the  instruments  of  payment  which  we  call  cash  are  in  reality 


AND   NEGOTIABLE   PAPER. 


only  promises  to  pay. 
During  the  Middle 
Ages  credit  transactions 
of  great  importance  and 
on  long  time  were  ef- 
fected without  leaving 
the  slightest  trace  in 
writing;  and  even  to 
t'nis  day  the  Russian 
producers  and  mer- 
chants who  frequent  the 
great  fair  at  Nijni 
Novgorod,  contract 
credit  obligations  for 
twelve  months'  time, 
without  giving  the  least 
evidence  of  the  debt, 
and  that  for  a  very  good 
reason :  very  frequently 
they  can  neither  read 
nor  write.  When  we 
give  credit  we  give 
value  and  wait  for  the 
value  we  are  to  receive 
in  return  ;  but  we  often 
cannot  afford  to  do  this, 
so  we  get  some  other 
person  to  wait  for  us  by 
giving  him  an  instru- 
ment of  credit  which 
we  take  when  we  de- 
liver our  goods.  This 
person  to  whom  we  give 
the  instrument  of  credit 
may  not  be  able  to  wait 
either,  so  he  takes  the 
paper  to  the  bank  and 
discounts  it.  It  is  the 
business  of  the  bank  to 
wait,  not  the  business 


02  BANKING,    COLLECTIONS, 


of  the  merchant.  The  latter  should  keep  his  full  capital  active  every 
day  and  every  dollar  he  is  waiting  for  is  inactive  and  is  earning  nothing. 
On  the  hand  the  bank  increases  its  capital  by  waiting  for  the  simple 
reason  that  it  charges  for  waiting  just  as  a  lawyer  charges  for  giving  his 
time  to  his  client.  But  does  this  increased  circulation  increase  capital  ? 
The  machine  runs  faster  and  turns  out  more  work  but  doesn't  increase  its 
size  or  its  intrinsic  value;  it  is  the  work  that  counts,  not  the  machine. 

History    of  Financial    Exchange. 

In  early  times  foreign  trade  consisted  in  the  direct  exchange  of 
commodities.  A  caravan  set  out  with  a  variety  of  manufactured 
articles,  across  the  deserts  of  Arabia  or  Sahara^  and  came  back  with  the 
ivory,  spices,  and  other  valuable  raw  products  obtained  by  barter.  In 
later  times  the  merchant  loaded  his  own  ship  and  sent  her  forth 
on  an  adventure,  trusting  that  his  shipmaster  would  sell  the  cargo  to  ad- 
vantage, and,  with  the  proceeds,  bring  'back  another  cargo  to  be  sold 
to  great  profit  at  home.  Trade  was  thus  reciprocal,  and  what  was  sent 
out  paid  for  what  was  brought  back.  Wherever  this  direct  reciprocal 
exchange  did  not  exist  it  was  necessary  to  devise  some  mode  of  trans- 
ferring debts.  To  the  early  Italian  and  Jewish  merchants  we  owe  the 
development  of  the  use  of  the  credit  instruments  which  have  since  de- 
veloped into  bills  of  exchange.  As  early  as  the  fourteenth  century  bills 
were  used  under  similar  customs  and  of  about  the  same  form  as  those 
of  the  present  day. 

Principles  of  Exchange. 

Iii  commerce  the  term  exchange  is  generally  used  to  designate  thai 
species  of  mercantile  transactions  by  which  the  debts  of  individuals 
residing  at  a  distance  from  their  creditors  are  cancelled  without  the 
transmission  of  money.  Among  cities  or  countries  having  any  consid- 
erable intercourse  together,  the  debts  mutually  due  by  each  other  ap- 
proach, for  the  most  part,  near  to  an  equality.  There  are  at  all  times, 
for  example,  a  number  of  persons  in  New  York  indebted  to  London, 
and  perhaps,  as  many  persons  in  London  indebted  to  New  York. 
Hence  when  A  of  New  York  wishes  to  make  a  payment  to  B  of  Lon- 
don, he  does  not  send  the  actual  money,  but  he  goes  into  the  market 
and  buys  a  bill  of  exchange  on  London,  that  is,  he  goes  to  a  New 
York  bank,  doing  a  foreign  business,  such  as  Brown  Bros.,  or  Drexel, 
Morgan  &  Co.,  and  buys  a  draft,  called  a  bill  of  exchange,  which  is  in 
reality  the  New  York  banker's  order  on  his  London  correspondent  ask- 


AND    NEGOTIABLE   PAPER.  63 

ing  the  latter  to  pay  the  money  to  the  person  named.  It  may  be  that 
about  the  same  time  some  London  merchant  who  owes  money  in  New 
York  goes  to  the  very  same  London  banker  and  buys  a  draft  on  the 
New  York  bank.  In  this  way  the  one  draft  cancels  the  other,  and 
when  there  is  a  difference  at  the  end  of  a  week  or  month  the  actual 
gold  is  sent  across  to  balance  the  account.  Inland  or  domestic  bills 
are  commonly  called  drafts.  Foreign  bills,  that  is,  bills  on  foreign 
countries  are  called  exchange.  The  par  of  the  currency  of  any  two 
countries  means,  among  merchants,  the  equivalency  of  a  certain  amount 
of  the  currency  of  the  one  in  the  currency  of  the  other,  supposing  the 
currencies  of  both  to  be  of  the  precise  weight  and  purity  fixed  by  their 
respective  mints.  Thus  according  to  the  mint  regulations  of  Great 
Britain  and  France,  £i  sterling  is  equal  to  25.2  fr.,  which  is  said  to 
be  the  par  between  London  and  Paris.  And  the  exchange  between  the 
two  countries  is  said  to  be  at  par  when  bills  are  bought  or  sold  at  this 
rate;  that  is,  for  example,  when  a  bill  for  ^100  drawn  in  London  is 
worth  2520  francs  in  Paris,  and  conversely.  When  £i  in  London 
buys  more  than  25.2  fr.,  exchange  is  said  to  be  in  favor  of  London. 
The  par  of  exchange  between  Great  Britain  and  the  United  States  is 
4.86^3,  that  is,  a  £i  sterling  is  worth  $4.86^/3.  Exchange  is  quoted 
daily  in  New  York  and  other  city  papers  at  4.87,  or  4.87*^,  etc.,  for 
sight  bills  and  at  a  slightly  lower  rate  for  sixty  day  bills.  These  are 
the  two  common  kinds  of  bills  usually  bought.  The  sixty  day  bills 
bought  in  New  York  are  as  good  as  cash  when  they  reach  London  but 
they  are  cashed  at  a  discount  from  their  face  value,  unless  they  are  held 
until  the  date  of  maturity.  The  foregoing  statements  explain  in  a  gen- 
^  eral  way  the  meaning  of  the  par  of  exchange,  but  its  exact  determina- 
tion, or  the  ascertaining  of  the  precise  equivalency  of  a  certain  amount 
of  the  currency  of  one  country  in  the  currency  of  another  is  exceed- 
ingly difficult.  If  the  standard  of  one  be  gold  and  that  of  another 
silver,  the  par  must  necessarily  vary  with  every  variation  in  the  relative 
values  of  these  metals.  The  value  of  the  precious  metals  even  in  con- 
tiguous countries,  is  always  exposed  to  fluctuations  from  the  overissue 
or  withdrawal  of  paper,  from  circumstances  affecting  the  balance  of 
payments.  Gold  is  usually  high  when  there  is  a  demand  for  gold  or  a 
scarcity  of  it  just  as  in  the  case  of  potatoes  or  wheat.  It  is  obvious, 
therefore,  that  it  is  all  but  impossible  to  say,  by  merely  looking  at  the 
mint  regulations  of  any  two  or  more  countries,  and  the  prices  of  bullion 
in  each,  what  is  the  par  of  exchange  between  them.  The  imports  and 
exports  of  bullion  is  the  real  test  of  exchange.  If  bullion  is  stationary, 


64 


HANKING,    COLLECTIONS, 


neither  flowing  into  nor  out  of  a  country,  its  exchanges  may  be  truly 
said  to  be  at  par;  and,  on  the  other  hand,  if  bullion  is  being  exported 
from  a  country,  it  is  a  proof  that  the  exchange  is  against  it,  and  con- 
versely if  there  be  large  importations.  Variations  in  the  actual  course 
of  exchange,  or  in  the  price  of  bills,  arising  from  circumstances  effect- 
ing the  currency  of  two  countries  trading  together,  are  nominal  only: 
such  as  are  real  grow  out  of  circumstances  effecting  their  trade.  When 
each  buys  of  the  other  commodities  of  precisely  the  same  value,  their 
debts  and  credits  will  be  equal,  and  the  real  exchange  will  be  at  par. 


^x 


^^S***Jk»r~i* 

&*v  /,.  fa  2S& ,/ ;  6L/j^ 

/CNI         -tTlff-n--r'innTimaitiAnnfiL^.  .-.„,- 

MiWHHWW^L' MCtAA/u'; 

X?  ^  ' 


"7U  \flAA.<i._  E  ImulfirVL-^  j    -  - 


'This  condition  of  affairs  very  rarely  happens.  The  cost  of  conveying 
bullion  from  one  country  to  another  forms  the  limit  within  which  the 
rise  and  fall  of  the  real  exchange  between  them  must  be  confined.  If 
a  New  York  merchant  owes  a  debt  in  London  and  exchange  costs  him, 
say  2  per  cent,  and  the  cost  of  shipping  the  gold  is  only  i  per  cent,  it 
will  be  to  his  advantage  to  pay  the  debt  by  sending  the  actual  coin 
across,  so  that  the  limit  within  which  trade  fluctuations  may  range  cor- 
to  the  actual  cost  of  making  remittances  in  cash.  Fluctua- 


AND    NEGOTIABLE   PAPER. 


65 


tions  in  the  nominal  exchange,  that  is,  in  the  value  of  the  currencies  of 
countries  trading  together,  have  no  real  effect  on  foreign  trade.  When 
the  currency  is  depreciated,  the  premium  which  the  exporter  of  com- 
modities derives  from  the  sale  of  the  bill  drawn  on  his  correspondent 
abroad  is  only  equivalent  to  the  increase  in  the  price  of  the  goods  ex- 
ported, occasioned  by  this  depreciation.  A  favorable  real  exchange 


L^^.-JL_. 


operates  as  a  duty  on  exportation,  and  as  a  bounty  on  importation.  It 
is  -;o  the  interest  of  merchants  or  bankers  who  deal  in  foreign  bills  to 
buy  them  where  they  are  the  cheapest,  and  to  sell  them  where  they  are 
the  dearest.  For  this  reason  it  might  often  be  an  advantage  for  a  New 
York  merchant  to  buy  a  bill  on  London  to  pay  a  debt  in  Paris,  or  to 
buy  a  bill  on  Paris  to  pay  a  debt  in  Berlin.  For  instance,  in  the  trade 


66  BANKING,    COLLECTIONS, 


between  England  and  Italy  the  bills  drawn  on  England  amount  almost 
invariably  to  a  greater  sum  than  those  drawn  on  Italy.  The  bill-mer- 
chants, however,  by  buying  up  the  excess  of  the  Italian  bills  on  Lon- 
don, and  selling  them  in  France  and  other  countries  indebted  to  En- 
gland, prevent  the  real  exchange  from  ever  becoming  very  much  de- 
pressed. 

Changes    in    Exchange    Rates. 

Exchange  is  not  effected  so  much  by  the  balance  of  trade  as  by 
the  balance  of  indebtedness.  Europe  can  contract  debts  in  America 
by  the  purchase  of  stocks,  bonds,  or  other  securities  as  readily  as  by  the 
purchase  of  wheat,  cotton,  or  oil,  the  rate  of  foreign  exchange  being 
similarly  affected  no  matter  what  is  bought.  European  owners  of 
American  securities  when  sending  them  to  America  obtain  the  right  to 


draw  against  the  American  receivers  of  those  securities.  One  hundred 
shares  of  stock  sent  by  a  London  firm  to  a  New  York  firm,  will  make 
as  much  exchange  against  New  York  as  the  same  value  in  wheat  shipped 
by  a  New  York  firm  to  a  Liverpool  account ;  so  that  the  balance  of 
trade,  so  far  as  imports  and  exports  are  concerned,  may  appear  favor- 
able and  yet  no  balance  of  indebtedness  appear.  The  movement  of 
merchandise  is  recorded  while  the  movement  of  securities  is  not  re- 
corded. The  sum  total  of  our  securities  in  European  hands  is  un- 
known, but  it  probably  exceeds  our  national  debt.  The  rate  of  foreign 
exchange,  affected  by  trade  movements  and  by  the  movements  of  se- 
curities, is  also  affected  by  interest  and  dividend  payments  and  by  re- 
mittances for  freight  on  importations  01  merchandise,  the  owners  of 
vessels  usually  being  foreigners.  Our  large  cities  send  annually  to 
Europe  drafts  for  hundreds  of  thousands  of  dollars  to  cover  interest  on 


AND    NEGOTIABLE   PAPER. 


city  bonds.  Foreign  exchange  is  affected  too,  by  the  difference  which 
exists  at  any  time  between  the  American  and  European  market  rate  of 
interest.  If  money  can  be  loaned  at  10  per  cent,  in  New  York  while 
only  3  per  cent,  can  be  obtained  in  London,  there  is  an  advantage  in 
keeping  or  sending  money  here,  the  difference  in  interest  being  greater 
than  the  cost  of  transportation.  The  fact  of  ours  being  a  gold  pro- 
ducing country  'is  also  important,  for  it  indicates  that  a  small  annual 
export  of  gold  is  to  be  expected.  There  is  another  factor  which  has  a 
noticeable  effect,  namely  that  of  travel.  Thousands  of  wealthy  Ameri- 
cans travel  abroad  every  summer  and  the  letters  of  credit  which  they 
carry,  if  not  counterbalanced  by  some  other  cause,  require  gold  ship- 
ments to  meet  them.  Ordinarily  when  the  market  rate  of  demand  ex- 
ceeds 4.867  it  is  evident  that  foreign  goods  have  been  imported  too 
freely,  or  American  goods  are  not,  wanted  abroad,  or  American  securi- 
ties find  a  better  market  here  than  in  Europe,  or  rates  of  interest  here 
are  too  low  to  attract  or  keep  foreign  money,  or  foreigners  are  short  of 
money,  or  there  are  great  numbers  of  Americans  abroad,  or  we  have 
produced  a  surplus  of  gold,  or  freight  remittances  are  large,  or  interest 
payments  on  securities  owned  abroad  are  heavy.  And  when  the  market 
rate  is  below  4.867,  the  reverse  is  true.  Of  course  there  are  other 
causes,  and  important  ones  too,  but  those  named  are  the  principal 
causes  of  changes  in  rates  under  normal  trade  conditions.  Eastern 
capital  is  extensively  used  in  the  West,  because  the  people  of  the  West 
can  make  a  profit  by  its  use  in  excess  of  the  interest  and  dividends  sent 
to  its  owners.  For  the  very  same  reason,  European  capital  is  exten- 
sively used  in  the  Unuiu  States. 

Domestic   Exchange. 

The  principle  of  domestic  or  local  exchanges  is  precisely  the  same 
as  that  described  as  underlying  the  foreign  exchange  business.  In  for- 
eign exchange  we  have  to  do  with  a  mixture  of  dollars  with  sovereigns 
or  other  foreign  money.  In  domestic  exchange  we  have  dollars  at  both 
ends  of  the  line.  Suppose  A  of  New  York  owes  B  of  Chicago  $12,000. 
He  buys  a  draft  (check)  on  Chicago  for  this  sum  and  mails  it  to  B. 
Now  this  draft  will  cost  him  something  in  addition  to  its  face,  but  it 
should  not  cost  more  than  $12  exchange,  for  the  reason  that  A  can  take 
his  $12,000  in  bills  or  gold  and  express  it  to  Chicago  for  $12.  If  $12 
were  charged  the  rate  of  exchange  would  be  &  of  one  per  cent.  But 
suppose  that  at  the  same  time  C  of  Chicago  has  $8,000  to  send  to  D 
of  New  York  and  is  trying  to  buy  a  draft  in  Chicago.  If  C  keeps  his 


68  BANKING,    COLLECTIONS, 

money  or  turns  it  over  to  B,  or  to  B's  bank,  or  for  that  matter  to  any 
bank,  A  need  not  ship  more  than  $4,000,  for  the  balance  can  be  turned 
over  to  D  in  New  York,  or  to  D's  bank,  or  to  any  bank.  Now  $4,000 
can  be  shipped  for  $4,  so  that  the  rate  of  exchange  on  a  draft  for  $12,- 
ooo,  only  $4,000  of  which  need  be  shipped,  should  not  be  more  than 
aV  of  one  per  cent.  Under  normal  conditions  exchange  should  be 
based  upon  the  cost  of  shipping  the  balances  due  rather  than  the  gross 
amounts  due.  If  Chicago  is  buying  more  through  New  York  than  New 
York  is  buying  through  Chicago,  it  will  be  necessary  at  regular  inter- 
vals to  ship  gold  or  bills  from  Chicago  to  New  York  to  meet  the  differ- 
ences, and  when  this  is  the  trade  condition,  drafts  on  New  York  if  pur- 
chased in  Chicago  will  be  at  a  premium.  Drafts  bought  in  New  York 
on  Chicago  should  be  at  a  discount,  but  as  a  matter  of  fact,  they  will 
be  at  par.  There  are,  of  course,  many  other  things  which  affect  ex- 
changes. Our  banking  system  is  such  that  the  condition  of  the  money 
market  is  uniform  in  each  banking  center  but  these  centers  may  differ 
very  largely  from  each  other,  and  while  in  Boston  the  banks  might  have 
more  money  than  they  could  use,  the  banks  of  St.  Louis  or  St.  Paul 
might  be  unable  to  meet  the  demand  upon  them. 

The    Cost  of  Shipping    Gold. 

There  are  times  when  it  is  to  the  advantage  of  the  banker  or  mer- 
chant to  ship  gold  to  meet  foreign  debts.  Usually  if  sight  bills  on  En- 
gland cost  more  than  4.90  it  is  cheaper  to  ship  gold.  The  following 
figures  give  some  particulars  of  the  cost  of  such  shipments  :  Freight — 
yk  of  one  per  cent.  Insurance — y&  of  one  per  cent.  Abrasion — From 
nothing  to  ^  of  one  per  cent,  on  $2o-pieces;  y^  per  cent,  to  *^  per 
cent,  on  $io-pieces,  and  %  per  cent,  to  }/2  per  cent,  on  $5 -pieces.  The 
cost  of  bringing  gold  from  London  to  New  York  is  the  same  as  the  cost 
from  New  York  to  London.  The  actual  demand  for  gold  in  either  city 
will  affect  its  value  slightly,  and  this  temporary  value  must  be  ascer- 
tained before  making  close  figures  on  a  large  transaction. 

The  World's  Financial  Center. 

There  is  no  doubt  of  the  fact  that  London  is  the  financial  center 
of  the  world.  This  tendency  to  the  centralization  of  financial  business 
in  London  is  much  promoted  by  the  fact  that  the  largest  mass  of  cheap 
loanable  capital  exists  there.  The  general  rate  of  interest  in  New  York 
is  at  least  3  per  cent,  higher  than  in  London,  so  that  a  trader  who  has 
credit  enough  to  obtain  loans  in  London,  will  make  a  profit  by  borrow- 


AND   NEGOTIABLE   PAPER. 


ing  there  rather  than  in  New  York  city.  The  great  banks  of  the  world 
each  of  which  is  a  center  for  its  own  section  of  country  must  have  a 
general  center  for  clearings  and  London  lias  grown  to  be  this  center. 
The  great  foreign  trade  of  England,  her  thousands  of  earring  ships,  her 
merchants  and  investments  in  every  country  on  the  globe,  the  age  and 
strength  of  her  great  financial  institutions,  and  the  many  distant  col- 
onies and  dependencies  which  naturally  have  financial  relations  with 
the  capital  of  the  empire,  tend  to  give  London  the  unique  position 
which  is  rightfully  hers.  Lombard  and  Threadneedle  streets  are  the 
great  money  streets  of  London,  as  Wall  street  is  of  New  York. 

The  World's  Currencies. 

In  addition  to  the  gold  and  silver  coins,  the  United  States  has  in 
circulation  about  $350,000,000  in  "greenbacks" — the  remnant  of 
the  forced  paper  currency  of  the  civil  war;  about  $155,000,000  in 
treasury  notes  issued  in  payment  for  silver  bullion  •  gold  certificates  in 
denominations  of  not  less  than  $20,  issued  upon  deposits  of  gold  ;  silver 
certificates  issued  against  standard  silver  dollars  deposited  in  the  treas- 
ury ;  currency  certificates  issued  in  denominations  of  not  less  than 
$5,000  upon  the  deposit  with  the  treasury,  by  national  banks,  of  United 
States  legal  tender  notes ;  national  bank  notes  of  denominations  of  $5 
and  upwards,  issued  by  banks  upon  the  deposit  with  the  treasury  of 
United  States  bonds  which  are  held  as  security  for  the  ultimate  redemp- 
tion of  the  notes.  The  currency  of  Great  Britain  in  actual  circulation 
includes  the  gold  sovereign  (value  $4.8665)  and  half-sovereign;  the 
sijver  crown  (value  $1.087),  half-crown,  shilling  (value  $0.217),  six- 
pence, four-pence,  and  three-pence.  The  paper  money  includes  the 
notes  of  the  Bank  of  England  the  smallest  denomination  of  which  is 
^£5,  the  notes  of  the  Scotch  and  Irish  banks,  the  smallest  denomination 
of  which  is  ^i,  and  the  notes  of  the  joint  stock  and  private  banks. 
The  currency  of  Canada  is  in  form,  at  least,  similar  to  that  of  the 
United  States.  Canada  has  no  gold  coinage  of  her  own.  The  gold 
coins  of  the  United  States  and  Great  Britain  pass  current  and  are  legal 
tender.  The  silver  coins  are  similar  to  those  of  the  United  States  ex- 
cept that  there  is  no  silver  dollar,  and  a  silver  five-cent  piece.  The 
notes  issued  under  the  authority  of  the  Dominion  are  of  the  denomina- 
tions $i,  $2  and  $4,  and  are  redeemable  on  demand  in  gold.  Bank 
notes  are  issued  by  the  chartered  banks  in  denominations  not  smaller 
than  $5.  No  special  security  in  the  way  of  deposit  of  bonds  is  required, 
but  the  notes  in  case  of  insolvency  are  a  preferred  claim  against  all  the 


7O  BANKING,   COLLECTIONS, 

assets  of  the  bank,  including  the  double  liability  of  the  stock  holders. 
The  aggregate  issue  rarely  exceeds  sixty  per  cent,  of  the  paid-up  capital 
of  the  bank  and  must  not  exceed  one  hundred  per  cent.  The  monetary 
system  of  Australia  is  the  same  as  that  of  Great  Britain.  British  India 
has  a  silver  standard  unit,  the  rupee  (value  $0.444).  There  are  gold 
coins  in  value  equal  to  five,  ten,  fifteen,  and  twenty  rupees  respectively. 
The  government  issues  notes  ranging  in  value  from  five  to  ten  thousand 
rupees  secured  by  deposits  of  gold  and  silver.  The  money  in  circula- 
tion in  India  exceeds  one  billion  dollars.  Germany  has  a  gold  stand- 
ard with  the  mark  (value  $0.208)  as  the  monetary  unit.  The  smallest 
gold  coin  is  the  5-mark  piece.  The  silver  coins  are  the  5-mark, 
2-mark,  i-mark,  i^-mark,  and  £-mark  pieces.  The  paper  money  in- 
cludes the  imperial  treasury  notes  payable  in  gold,  and  the  bank  notes 
of  the  Reichsbank,  an  institution  with  individual  shareholders,  but 
largely  under  the  control  of  the  government.  The  issue  of  notes  of  less 
denomination  than  100  marks  is  prohibited.  The  government  of 
Austria- Hungary  has  recently  established  a  monetary  system  witli  the 
gold  crown  (value  $0.203)  as  tne  unit.  The  gold  coins  consist  of  a 
lo-crown  and  a  2o-crown  piece,  and  the  silver  coins  of  a  crown  and  a 
half-crown  piece.  As  a  matter  of  fact  there  is  very  little  metallic 
money  in  circulation.  The  money  most  in  use  consists  of  an  irredeem- 
able paper  currency  issued  by  the  Austro-Hungarian  Bank  in  denomina- 
tions of  10,  100,  and  1,000  florins  (two-crowns),  and  by  the  treasury  in 
smaller  denominations.  The  Latin  Union  which  includes  France, 
Belgium,  Italy,  Switzerland,  and  Greece  has  now  a  single  gold  standard 
with  the  franc  (value  $0.1929)  as  the  monetary  unit.  The  smallest 
gold  coin  is  the  5-franc  piece;  the  silver  coins  are  the  franc,  the 
2-franc,  the  half-franc,  and  the  2o-centimes  (one-fifth  of  a  franc). 
The  coins  of  one  country  are  received  at  par  in  the  others.  France 
issues  bank  notes  through  the  bank  of  France.  Belgium  issues  bank 
notes  through  the  bank  of  Belgium,  payable  to  the  bearer  at  sight,  and 
individuals  and  associations  are  free  to  issue  bank  notes  on  their  own 
responsibility.  Italy  has  no  state  bank,  but  there  are  in  the  country 
six  banks  which  are  authorized  to  issue  notes  payable  on  demand.  The 
smallest  denomination  is  5o-lire.  Switzerland  has  now  a  state  bank 
with  central  offices  at  Berne  and  branches  throughout  the  country. 
Greece  has  three  banks  authorized  to  issue  notes  on  such  a  very  low 
gold  and  silver  reserve  that  for  many  years  gold  has  been  at  a  premium. 
Spain  has  the  silver  peseta,  equivalent  to  the  franc,  as  a  monetary  unit. 
It  has  the  same  gold  and  silver  coins  as  the  other  countries  of  the  Latia 


AND  NEGOTIABLE  PAPER.  71 


Union.  Tne  only  bank  of  issue  in  the  country  is  the  bank  of  Spain,  a 
private  institution,  with  certain  government  restrictions.  Its  smallest 
note  of  issue  has  the  value  of  25 -pesetas.  The  Scandinavian  Monetary 
Union  embraces  Sweden,  Norway  and  Denmark.  The  krone  or  crown 
(value  $0.268)  is  the  monetary  unit.  The  gold  coins  are  lo-kronen 
and  2o-kronen,  and  the  silver  coins  are  the  2-kronen,  the  krone,  and 
the  fractional  currency.  Sweden  has  a  bank  of  issue  entirely  under  the 
control  of  the  state.  Joint-stock  banks  are  also  permitted  to  issue  notes 
under  restrictions  favorable  to  the  monetary  system.  Norway  has  one 
bank  of  issue — a  joint-stock  bank  with  the  state  as  principal  share- 
holder. Denmark  issues  notes  through  a  state  bank.  The  monetary 
unit  of  The  Netherlands  is  the  guilder  or  florin  (value  $0.402)  of 
100  cents.  The  gold  coins  are  the  lo-florin  and  5-florin  pieces. 
Tho  bank  of  the  Netherlands,  situated  in  Amsterdam,  has  the  ex- 
clusive right  to  issue  notes.  The  monetary  unit  of  Russia  is  the 
silver  ruble  (value  $0.38)  of  100  kopecks.  The  gold  coins  are  the  im- 
perial equal  to  10  rubles  and  the  half-imperial.  The  National  Bank  of 
Russia  is  the  only  bank  of  issue  in  the  empire.  This  bank  issues  paper 
money  denominations  of  I,  3,  5,  10,  25,  and  100  rubles.  The  gold 
milreis  (value  $1.08)  is  the  monetary  unit  of  Portugal.  The  only  bank 
of  issue  in  Turkey  is  the  Imperial  Ottoman  the  notes  of  which  are  pay- 
able exclusively  in  gold.  The  currency  of  China  is  made  from  an 
alloy  of  copper,  iron,  and  tin.  In  all  large  transactions,  silver  by 
weight  is  the  medium  of  exchange,  the  Mexican  dollar  being  used  in 
the  South  and  ingots  called  shoes,  in  the  North.  There  are  large 
numbers  of  private  banks  which  issue  notes  upon  their  own  authority  for 
local  circulation.  The  legal  money  of  Japan  is  the  yen  of  100  sen. 
The  yen  is  almost  equal  in  value  to  our  silver  dollar.  Trade  among 
Japanese  is  carried  on  to  a  large  extent  by  paper  money  issued  under 
the  authority  of  the  government.  Mexico  has  a  single  silver  standard. 
The  Mexican  dollar  (el  peso)  is  the  unit,  and  under  the  name  of  piaster, 
is  the  current  coin  of  several  countries  in  America,  Asia,  and  Africa. 
There  are  also  gold  coins  in  circulation  the  smallest  (i  peso)  being 
almost  equal  in  value  to  our  gold  dollar.  The  Central  American  States 
have  bank  notes  but  the  metallic  currency  of  these  republics  is  largely 
Mexican.  Chile  is  on  a  silver  basis,  so  far  as  specie  is  concerned. 
The  real  medium  of  exchange  is  a  depreciated  paper  currency.  The 
unit  is  the  peso  equal  to  the  5-franc  piece  of  France.  The  unit  of  the 
Argentine  Republic  is  the  same  but  of  gold.  The  actual  currency  is 
depreciated  paper  fluctuating  greatly  in  value. 


BANKING,    COLLECTIONS, 


Value    in    Gold    of  the    World's    Coins. 


8  I 

Sovereign. 

Franc. 

3 

Florin. 

Rouble. 

d 
•o 

Kroner. 

Milreis. 

Piastre. 

B 

£  Si 
'£  5 

Q 

3 

00 

p 

1 

1 

<£ 

c 

i 

i 

w 

i* 

P 

Sovereign  

0.04 

0.81 
0.40 
0.48 
0.24 
0.39 
0.72 
0.18 
0.35 
0.19 
0.20 
0.21 
0.21 
0.19 
0.20 
0.21 
0.20 
0.19 
0.20 
0.19 
0.08 
0.41 
1.65 
3.87 
4.39 

0.05 
1.24 

"6!49 
0.59 
0.30 
0.48 
0.89 
0.23 
0.44 
0.24 
0.24 
0.25 
0.26 
0.23 
0.25 
0.26 
0.25 
0.24 
0.24 
0.24 
0.10 
0.50 
2.04 
4.78 
5.42 

0.10 
2.50 
2.03 

"1.20 
0.61 
0.96 
1.80 
0.45 
0.88 
0.48 
0.49 
0.50 
0.53 
0.47 
0.50 
•  '.52 
0.51 
0.48 
0.49 
0.48 
0.21 
1.02 
4.13 
9.68 
10.98 

0.08 
2.09 
1.69 
0.83 

"6.'50 
0.80 
1.50 
0.37 
0.74 
0-40 
0.41 
0.42 
0-44 
0.39 
0.42 
0.43 
0.42 
0.40 
0.41 
0.40 
0.18 
0.85 
345 
8.10 
9.16 

0.16 
4.13 
3.35 
1.65 
1.98 

"L59 
2.98 
0.74 
1.46 
0.80 
0.81 
0.83 
0.87 
0.77 
0.83 
0.86 
0.84 
0.79 
0.82 
0.80 
0.35 
1.68 
6.83 
16.00 
18.15 

0.10 
2.60 
2.11 
1.04 
1.25 
0.63 

Ts? 

0.46 
0.92 
0.50 
0.51 
0.52 
0.55 
0.48 
0.52 
0.54 
0.53 
0.49 
0.51 
0.50 
0.22 
1.06 
4.26 
10.07 
11.42 

0.06 
1.39 
1.13 
0.56 
0.67 
0.34 
0.53 

'(K25 
0.49 
0.27 
0.27 
0.28 
0.29 
0.26 
0.28 
0.29 
0.28 
0.26 
0.27 
0.27 
0.12 
057 
2.29 
5.38 
6.10 

0.22 
5.60 
4.54 
2.24 
2.68 
1.36 
2.15 
4.03 

Tsi? 
1.08 
1.10 
1,12 

1.13 
1.04 
1.12 
1.16 
1.14 
1.07 
i.10 
1.08 
0.47 
2.28 
9.25 
21.69 
24.60 

0.11 

2.83 
2.29 
J.13 
1.36 
1.68 
1.09 
2.04 
0.51 

'b"55 
0.56 
0.57 
0.60 
0.53 
0.57 
0.59 
0.58 
0.54 
0.56 
0.55 
0.24 
1.15 
4.64 
10.96 
12.44 

0.02 
0-61 
0.49 
0.24 
0.29 
0.15 
0.23 
0.44 
0.11 
0.21 
0.12 
0.12 
0.12 
0.13 
0.11 
0.12 
0.13 
0.12 
012 
012 
0.12 
0.05 
0.25 

"2.34 
2.66 

0.01 
0.26 
0.21 
0.10 
0.12 
0.06 
0.10 
0.19 
0.05 
0.91 
0.05 
0.05 
0.05 
0.05 
0.05 
0.52 
0.05 
0.05 
0.05 
0.05 
0.05 
0.02 
0.11 
0.43 

0.01 
0.23 
0.18 
0.09 
0.11 
O.Ui 
0.09 
O.JG 
0.04 
O.C8 
0.04 
0.04 
0.05 
0.<<5 
O.U4 

o.o:> 

0.05 
0.05 
0.04 
0.04 
004 
0.02 
0.09 
0.38 
0.88 

Franc  
Mark  

25.22 
20.43 
10.09 
12.09 
6.10 
9.70 
18.16 
4.50 
8.91 
4.88 
4.95 
5.04 
5.33 
4.69 
5.04 
5.22 
5.13 
4.80 
4.95 
4.89 
2.12 
10.27 
41.68 
97.69 
110.71 

Florin,  A.  H  

Dutch  
Rouble  

Escudo 

Kroner  

Milreis  P 

44        B 

Dollar,  U.S.  A  
41      Mexico  

41      A.  R  

44      Chile 

44     Uruguay  

*•     Ven 

44     Bolivia  

44     Ecuador.... 

4-     Nfld  .  ... 

44     P.  I 

Yen  

Toman  

Rupee 

44     Egypt 

4*     Turkey  

W    Q 

o> 

Dollar. 

c 
1 

1 
i 

02 

i 

I 

11 
p 

1 

g 

1 

N 

0.20 
5.00 
4.05 
2.00 
2.40 
1.21 
1.92 
3.60 
0.89 
1.79 
0.% 
0.98 
1.00 
1.06 
0.93 

1 

0.19 
4.84 
3.92 
1.93 
2.32 
1.17 
1.86 
3.48 
0.86 
1.71 
0.93 
0.95 
0.97 
1.02 
0.90 
0.97 

"6."96 
0.92 
0.9^ 
0.94 
0.41 
1.97 
799 
18.73 
21.24 

fe 

1 
I 

0.20 
4.92 
3.99 
1.97 
2.36 
1.19 
1.89 
3.54 
0.88 
1.74 
0.95 
0.97 
0.98 
1.04 
0.95 
0.98 
1.01 

'(X94 
0.97 
0.95 
0.41 
2.00 
8.13 
9.0(1 
21  62 

M 

<o 

Jjs 

Ll 

0.20    0.20 
5.10   5.17 
4.13    4.19 
2.04    2.07 
2.44    2.48 
1.23    1.25 
1.96    1.99 
3.67    3.72 
0.91    0.92 
1.80    1.83 
0.98    1.00 
1.00   1.01 
1.02    1.03 
1.08    1.09 
0.95    0.96 
l.(2    1.03 
1.05    1.07 
1.04    1.05 
0.97    0.98 
1.01 
0.99  
0.43   0.44 
2.C8    2.10 
S  42    8.54 
19.74  20.  OT, 
22.39  22.69 

Sovereign 

0.21 
5.18 
4.20 
2.07 
2.48 
1.25 
1.99 
3.73 
0.93 
1.83 

0.20 
5.10 
4.13 
2.04 
2.44 
1.23 
1.97 
3.67 
0.91 
1.81 
0.98 

Tf>2 
1.08 
0.95 
1.09 

0.20 

4^05 
2.00 
2.39 
1.21 
1.92 
3.60 
0.89 
1.77 
0-96 
0.98 

1.06 
0.93 
1  00 

4.73 
396 
1.89 
2.27 
1.14 
1.82 
3.40 
0.84 
1.67 
0.91 
0.93 
0.95 

"b!90 
0% 

0  91 

0.21 
5.25 
4.26 
2.10 
2.52 
1.27 
2.02 
3.78 
0.94 
1.86 
1.01 
1  03 
1.05 
1.11 

l'.05 
1.09 
1.07 

T(J3 
1.02 
0.44 
2.14 

8  68 
20.39 
23.08 

0.47 
11.87 
9.62 
4.75 
5.69 
287 
4.57 
8.55 
2.12 
4.19 
229 
2.33 
2.37 
2.51 
2.21 
2.37 
2.45 
2.41 
2.30 
233 
230 

4"84 
19.02 
45.99 
52.14 

0.10 
2.46 
1  9'J 
0.98 
1.19 
0-59 
0.94 
1.77 
0.40 
0.87 
0.47 
0.48 
0.49 
0.52 
0.46 
049 
0.51 
0.50 
0.47 
048 
0.48 
0.21 

"4"06 
9.56 
10.78 

Franc           .        

5.38 
4.36 
2.15 
2.58 
1.30 
2.07 
3.87 
0.96 
1.90 
1.04 
1.06 
1.C6 
1.14 

TOR 

Mark  

Florin  AH  

14       Dutch  

Rouble  

Escudo  

Kroner             . 

Milreis,  P  

44        B 

Dollar,  U.  S.  A  

44     Mexico  
"      A.  R  

.    1.02 
1.04 
1.10 
0.96 
1.04 

44     Chile 

"     Uruguay... 

"     Ven  

"     Bolivia 

.    1.08 
.    1.05 
.    0.99 
.    1.02 
.    1.00 
.    0.44 
.    2.11 
.    K.56 

1.05|  1.03 

1.04;    1.02 

0.97    0.95 
1.00    0.98 
0.99    0.97 
0.43    0.42 
2.08!  2.04 
8.43'  8.26 
19.8319.37 
22.39  21.96 

0.98 
096 
0.9 
0.93 
0.92 
0.40 
1.93 
7.14 
18.32 
20.77 

1.11 

1.09 
1.02 
1.06 
1.04 
0-45 
2.19 
8.89 
20.83 
23.62 

1.03 
101 
0.95 
0.98 
097 
0  4'<> 

44     Ecuador.  ... 

•«     Nfld  

"     P.  I.... 

Yen    

Toman 

Rupee                        . 

2.04 

Piastre,  Tunis  

44      Egypt  

.  20.07 

'9.37 
21.96 

14      Turkey  

.  22.76 

AND   NEGOTIABLE   PAPER. 


73 


English    Money. 

Any  person  may  take  bar  gold  to  the  extent  of  ^£20,000  to  the 
English  mint  and  have  it  returned  to  him  in  sovereigns  and  half  sov- 
ereigns. The  Bank  of  England  receives  bar  gold  at  ^3  ijs.  yd.  per 
ounce  and  pays  in  gold  coin.  The  English  sovereign  weighs  123.274 
grains,  and  is  a  legal  tender  so  long  as  it  does  not  weigh  less  than 
122.5.  English  silver  and  bronze  coins  are  fiat  money,  that  is,  their 
intrinsic  value  is  materially  less  than  their  face  value.  The  difference 
between  the  token  value  and  the  real  or  intrinsic  value  is  called  seig- 
norage  and  this  is  a  quite  large  source  of  revenue.  English  gold  coins 
are  a  legal  tender  for  any  amount  ;  silver  coins  are  a  legal  tender  for 
only  forty  shillings  or  less,  and  bronze  coins  for  one  shilling  or  less 


The  golrf  is  largely  handled  by  bullion  brokers.  The  Bank  of  England 
notes  are  very  ordinary  looking  pieces  of  white  paper  with  plain  black 
printing,  somewhat  larger  in  size  than  those  of  the  United  States. 
The  paper  is  specially  made,  is  very  strong,  and  is  not  easily  burned. 
No  note  is  paid  out  a  second  time.  Every  check  or  draft  is  paid  in  new 
bills.  The  smallest  note  is  one  pound.  In  sending  bank  notes  by  mail 
tne  Englishman  generally  cuts  them  in  halves,  takes  a  careful  record  of 
their  marks  and  numbers,  and  sends  one  of  the  halves  by  registered 
mail,  and  the  other  by  ordinary  post.  The  illustration  here  given  is  an 
America^  check  or  draft  bearing  a  close  resemblance  to  the  Bank  of 
England  note.  The  Scotch  and  Irish  banks  have  a  paper  issue  of  their 
own,  and  there  are  joint-stock  banks  and  private  banks  that  issue  bank 
notes.  These  bank  notes,  although  they  pass  current,  are  not  legal 


74 


BANKING,    COLLECTIONS. 


tender.  There  are  255 
banks  in  England.  Of 
these  57  are  in  London. 
The  crossed  check  so 
common  in  England  is 
unknown  in  the  United 
States.  It  is  simply  an 
ordinary  check  that 
has  upon  its  face  marks 
which  signify  that  it 
must  be  presented 
through  some  other 
bank  or  banker ;  and 
checks  of  this  descrip- 
tion will  not  be  cashed 
if  they  reach  the  bank 
upon  which  they  are 
drawn  by  any  other 
way.  They  are  abso- 
lutely worthless  for  pre- 
sentation in  the  hands 
of  the  wrong  persons. 
The  banks  are  forbid- 
den by  law  to  cash  such 
a  check  over  the  coun- 
ter. The  receiver  of 
such  a  check  must 
necessarily  deposit  it. 
Our  stamped  words 
' '  Payable  only  through 

the clearing-house 

when  properly  en- 
dorsed "  have  nearly 
the  same  effect.  Some 
Iiouses  say  on  their  bill- 
heads how  checks  are  to 
be  crossed.  When  the 
check  is  crossed  simply 
by  two  lines  it  may 
reach  the  bank  upon 


AND   NEGOTIABLE   PAPER.  75 

which  it  is  drawn,  through  any  bank ;  when  it  is  crossed  with  a  bank's 
name,  it  must  reach  the  bank  upon  which  h  is  drawn  through  the 
banker  whose  name  appears  between  the  crossed  lines.  When  the 
drawer  knows  the  name  of  the  payee's  banker  he  usually  inserts  it; 
otherwise  he  simply  draws  the  lines.  English  banks  do  not  certify 
checks.  Every  check  must  bear  a  penny  stamp  no  matter  for  how  small 
an  amount  it  is  drawn.  The  British  consols  are  securities  representing 
the  consolidated  debt  of  England ;  the  word  consol  being  an  abbrevia- 
tion of  consolidated.  They  are  quoted  in  the  financial  columns  of  the 
newspapers.  Here  is  an  illustration  :  "  Consols  are  unchanged  at  94^ 
for  cash  and  94^  for  November  settlement."  The  word  settlement  is 
used  as  we  would  use  the  word  account.  On  the  London  Stock  Ex- 
change there  are  special  settling  days  for  securities  of  all  sorts,  includ 
ing  transactions  in  foreign  exchange.  By  "  November  settlement "  it  is 
understood  that  the  consols  are  to  be  paid  for  on  the  November  set- 
tling day. 

» 

Canadian    Money. 

Many  Americans  hesitate  to  accept  Canadian  money,  usually  foi 
the  reason  that  they  have  difficulty  in  passing  it  and  partly  from  igno- 
rance of  its  security.  The  Canadian  silver  coins  are  in  reality  of  greater 
value  than  the  corresponding  coins  of  the  United  States  for  the  reason 
that  they  contain  more  silver.  The  Canadian  one-dollar-bill,  two-dol- 
lar-bill, and  four-dollar-bill  are  equal  in  value  to  the  very  best  securi- 
ties offered  here  for  the  reason  that  they  are  issued  by  the  Canadian 
government  and  are  covered  by  actual  gold  and  silver  in  the  treasury. 
The  notes  issued  by  the  Canadian  banks  are  almost  equally  good,  for 
the  reason  that  the  banks  are  very  large  institutions,  many  of  them  larger 
than  the  largest  banks  in  the  United  States.  The  Bank  of  Montreal  is 
one  of  the  largest  and  strongest  financial  institutions  in  the  world.  It 
has  a  p:,  id-up-in-gold  capital  of  twelve  millions  and  a  gold  surplus  of 
six  millions,  and  has  about  forty  branches  in  the  large  cities  and  towns 
of  the  Dominion.  Only  two  banks  in  New  York  city  have  a  capital  as 
great  as  $5,000,000.  The  Canadian  Bank  of  Commerce  has  as  many 
branches.  The  Merchants'  Bank  of  Canada  has  six  millions  of  capital 
and  three  millions  of  surplus.  No  bank  is  chartered  that  has  not  a 
capital  of  at  least  $500,000.  There  are  in  all  about  forty  banks  with 
more  th-m  500  branches.  These  banks  issue  notes  of  denominations 
of  $5  and  upwards,  but  the  government  regulations  are  so  exacting  that 
if  a  bank  should  fail  the  holders  of  its  notes  would  be  almost  sure  tQ 


BANKING,   COLLECTIONS, 


receive  their  full  value.     These  banks  always  pay  out  over  the  counter 
their  own  bills.     Under  our  United  States  system,  which  leaves  each 
bank  so  largely  dependent  upon  the  fortunes  of  its  locality,  and  the 
business  of  each  locality  so  entirely  dependent  upon  its  local  banks,  it 
is  a  common  thing  to  see  mutual  ruin  of  banks  and  businesses  in  numer-    ; 
ous  widely  scattered  localities,  while  the  business  of  the*  country  as  a   • 
whole  is  sound.     Such  results  are  impossible  in  Canada.     The  widely 
extended  system  of  each  of  the  great  banks,  with  its  branches  in  every 
part  of  the  country,  constitutes  a  sort  of  financial  insurance,  by  which 
each   helps  to  guarantee  the  soundness  of  all ;    while  the  Canadian 
branch  systems  interlocking  at  every  town  leave  it  simply  impossible  > 
that  any  local  point  of  the  least  importance  should  for  a  moment  be 
lacking  in  the  most  complete  discount,  currency,  and  other  banking  ' 
facilities,  so  long  as  the  whole  business  of  the  Dominion  is  not  involved  . 
in  common  ruin.     The  currency  system  is  elastic  and  always  meets  the 
demands.     Panics  for  fear  of  stringency  are  unknown.     A  run  on  a 
bank  as  we  understand  it  is  impossible.  , 


Note  Brokers. 

Merchants  sell  a  great  many  of  their  notes  in  the  open  market, 
that  is,  to  note  brokers.     The  banks  buy  these  notes  from  the  note 
brokers.     The  assistance  of  the  broker  who  handles  commercial  paper 
is  a  necessary  and  valuable  aid  to  the  purchasing  bank.     Fully  seven-  • 
eights  of  all  the  paper  purchased. by  New  York  city  banks  is  purchased 
upon  the  simple  recommendation  of  the  note  brokers.     As  a  rule  these  : 
brokers  simply  transfer  the  paper  without  guaranteeing  by  endorsement,  , 
its  payment.     Notes  bought  by  banks  from  note  brokers  without  their 
endorsement  are  held  to  be  guaranteed  by  them  to  be  all  right,  in  all 
points,  except  that  which  covers  the  question  of  whether  they  will  be  , 
paid  or  not.     The  bank  uses  its  best  judgment  in  taking  the  risk.     If 
the  note  dealer,  in  selling  notes  to  a  bank,  makes  what  he  believes  to 
be  fair  and  honest  representations  regarding  any  particular  paper,  state- 
ments of  such  a  straightforward  type  that  upon  them  no  charge  of  false 
pretenses  can  be  made  to  rest,  he  simply  guarantees  the  note  genuine  as 
to  names,  date,  amount,  etc.,  and  that,  in  selling  it,  he  conveys  a  good' 
title  to  the  paper.     As  business  men,  however,  they  are  very  cautious, ; 
and  are  exceedingly  anxious  that  the  paper  they  sell  shall  be  paid,  andi 
as  a  rule  they  make  good  any  losses  which  grow  out  of  apparent  mis- » 
representations  on  their  part. 


AND  NEGOTIABLE  PAPER.  77 


Single-name  Paper. 

The  custom  of  issuing  single-name  paper  has  grown  largely  of  late. 
The  maker  is  the  borrower,  and  the  buyer  must  consider  his  personal 
credit  when  making  the  purchase.  It  is  estimated  that  two-thirds  of 
all  the  paper  bought  by  New  York  city  banks  is  single-name.  Such 
paper  makes  no  pretense  to  be  anything  else  but  what  it  appears,  a 
simple  promise  to  pay,  and  in  this  it  differs  from  accommodation  paper. 
Genuine  double-name  paper  consists  of  notes  given  in  actual  payments 
of  merchandise  sales. 

Commercial  Crises. 

Disturbances  of  the  course  of  trade  arise  largely  from  the  necessity 
of  re-adjusting  its  conditions  to  the  common  standard  and  measure  of 
value.  The  common  standard  of  value  is  money,  and  the  conditions 
of  trade  which  require  to  be  adjusted  to  it  are  the  prices  of  commodities, 
and  contracts  and  obligations  of  all  kinds.  Contracts  and  obligations, 
agreements  to  pay  money  at  a  future  time  for  something  presently  re- 
ceived, form  the  credit  system  of  modern  commerce.  Inability  to  meet 
these  obligations  constitutes  bankruptcy,  and  a  great  multiplicity  of 
bankruptcies  occurring  simultaneously  constitutes  a  commercial  crisis. 
If  all  persons  were  in  the  habit  of  paying  immediately  for  everything 
received,  there  could  be  no  debts,  and  consequently  no  failures  nor 
panics.  Those  nations  where  the  credit  system  has  received  its  widest 
development,  and  where  consequently  the  spirit  of  commercial  adven- 
ture and  speculation  is  most  rife,  are  most  exposed  to  the  ravages  of 
recurring  periods  of  bankruptcy.  Money  panics  are  usually  preceded 
by  years  of  active  trade,  high  wages,  multiplication  of  new  enterprises, 
and  general  prosperity.  Each  period  of  abnormal  and  exciting  pros- 
perity is  followed  by  a  violent  collapse  resulting  in  increased  rates  of 
interest,  closing  of  factories,  failures  of  banks  and  mercantile  houses, 
and  enforced  idleness  of  large  numbers  of  people,  often  resulting  in  ex- 
treme social  disturbances.  There  is  no  remedy  except  in  the  con- 
currence of  mankind  to  keep  out  of  debt  and  to  avoid  all  temptation  to 
make  gain  without  equivalent  labor.  This  is  impossible  however. 
Civilization  is  so  interlaced  with  the  credit  system  that  it  is  idle  to  talk 
of  abolishing  it.  The  interests  of  mankind  require  that  it  should  con- 
tinue, even  at  the  cost  of  its  abuses.  There  is,  too,  a  desire  for  gain 
without  labor  which  is  legitimate.  Nine-tenths  of  all  the  inventions 
and  discoveries  which  have  advanced  mankind  from  the  stone  age 


78  BANKING,    COLLECTIONS, 


to  the  age  of  electricity  have  had  their  origin  in  this  desire.     It  may 
be,  too.  that  an   occasional  crisis  is  a  good   thing,  in  so  much  that  it 


urn.  of 


<xA    k<J1cr',  tvvfu-  CLfV\A/    4tUM.cC)   ..K^-      tWCOyi/    /UOXXtAjC  Co    ~W\Ji- 

D  q  C  3      * 

^e/iJl  ol  ^lifOO-^^cuu  3iirv.  Jtv^VMiAJLoC  ..-jnmm.cU  xU<Dt£* 

.  <t,cf5  ^cv,  MESS-  SMITH  BROS,  fa  Co. 
LONDON  •.  <a 


mx4    JLtMiA.,  OUM.d.  UK.  AA^.Q(XOJ^  "t4tai  ~UUL  AOAMJL  A%\.ojUL  OvuuX  otux  "VtCTttjO-V 


shows  commercial  leaders  by  an  objective  lesson  the  influences  which 
tend  to  make  trade  successful  or  disastrous. 


AND   NEGOTIABLE   PAPER. 


Letters    of   Credit. 

The  ordinary  letter  of  credit  is  the  leading  and  usual  instrument 
for  the  use  of  travelers  in  Europe  and  has  now  become  such  a  common 
feature  of  banking  that  every  one  should  be  familiar  with  its  form 
and  purpose.  We  reproduce  a  fac  simile  of  the  first  and  second  pages 
of  a  circular  letter  for  ^500.  The  first  is  the  credit  proper  authorizing 
the  various  correspondents  of  the  bank  issuing  it,  who  are  named  on 
the  third  and  fourth  pages,  or  any  other  banker  to  whom  the  letter  may 
be  presented,  to  pay  the  holder,  whose  signature  is  given  on  its  face, 
money  to  the  extent  of  ^500.  The  second  page  shows  how  the  holder 


ATE  WHE 
PAID 


By 


in    (uord; 


Op 


J« 


Go 


2.0 

/O 
/O 

//o 


availed  himself  of  the  advantages  of  the  letter.  It  gives  the  names  of 
the  banks  to  which  he  presented  his  letter  and  the  amounts  paid  by 
each.  With  such  a  letter  a  traveler  could  make  a  trip  around  the 
world  and  not  have  in  his  pocket  at  any  one  time  more  gold  or  silver 
or  bills  than  would  be  necessary  to  meet  immediate  local  expenses. 
When  a  banker  issues  a  letter* of  credit,  the  party  purchasing  it,  and 
who  is  to  use  it  abroad,  places  his  signature  upon  a  lower  corner  of  the 
document  in  the  banker's  presence.  Other  copies  of  the  signature  are 
left  and  are  forwarded  to  the  leading  foreign  bankers  drawn  upon. 
When  the  party  buying  the  draft  presents  himself  at  a  London  or  Paris 


8o 


BANKING,    COLLECTIONS, 


bank  with  his  let- 
ter of  credit  and 
asks  for  a  pay- 
ment upon  it,  the 
banker  asks  him 
to  sign  a  draft 
on  the  American 
banker  issuing  the 
letter,  for  the 
amount  required, 
which  amount  is 
properly  entered 
upon  the  letter  of 
credit  before  it  is 
returned  to  the 
payee.  Payment 
is  usually  made 
upon  the  simple 
identification  of 
comparison  of 
signatures.  If  a 
traveler  should 
lose  his  letter  of 
credit  he  should 
notify  at  once  the 
banks  upon  and 
by  whom  it  is 
drawn.  These 
letters  are  cash 
anywhere.  Al- 
most any  banker 
in  the  world  will 
at  any  time  con- 
sider it  to  his  ad" 
vantage  to  buy  a 
reliable  sterling 
draft  on  London. 
Such  drafts  should 
sell  at  a  premium 
anywhere. 


us 


01  ^ 

11VHS  Ij  iVHi  NOI11QNOD 
3fl63HO  SIH1 


NO 


f-^-*^t<*z^^*~*^*-^^-~i^~*- 


AND   NEGOTIABLE  PAPER.  8 1 

The    Clique    Bank. 

This  is  an  English  institution  with  a  branch  in  New  York  city  and 
agencies  in  other  cities.  This  bank  sells  to  its  customers  a  book  of 
checks  each  of  which  can  be  filled  up  only  to  a  limited  amount,  as 
shown  by  printed  and  perforated  notices  appearing  on  the  blank.  For 
instance  for  £100  one  can  buy  a  check  book  containing  fifty  blank 
checks  each  good,  when  properly  filled  up,  for  £2.  Each  of  these 
checks  is  really  a  certified  check,  only  it  is  certified  in  advance  of  issue. 
Its  payment  is  guaranteed  by  the  bank  rather  than  by  the  maker.  Any 
of  the  thousand  or  more  foreign  banks  which  are  agents  for  the  Cheque 
Bank,  sell  these  check  books  and  cash  the  checks  when  presented. 
The  Bank  of  England  is  a  bankers'  bank  in  the  sense  that  it  holds  re- 
serves of  other  banks,  and  makes  those  final  payments  of  cash  which 
close  the  general  balance  of  transactions.  The  Cheque  Bank  is  a 
bankers'  bank  in  the  opposite  sense  of  making  deposits  in  all  other 
banks  and  employing  them  as  agents.  Although  the  checks  are  issued 
for  limited  amounts  they  may  be  drawn  for  any  amount  within  the 
maximum  value.  The  amounts  that  may  be  short  drawn,  go  towards 
the  cost  of  a  new  check  book,  or  may  be  returned  in  cash.  A  form 
of  claim  for  the  short-drawn  balances  is  provided  on  the  cover  of  each 
check  book.  Check  books  are  made  up  to  suit  the  customers'  conven- 
ience, and  may  be  had  either  with  checks  all  of  the  same  denomina- 
tion or  of  assorted  values.  Paid  checks  are  returned  when  request  for 
them  is  made.  All  checks  are  issued  crossed  and  payable  to  order. 
This  requires  the  endorsement  of  the  persons  to  whom  the  checks  are 
paid,  and  the  further  security  that  checks  can  only  be  cleared  by  passing 
through  the  hands  of  a  banker.  A  peculiar  feature  of  the  Cheque 
Bank  is  that  it  entirely  abstains  from  using,  or  even  holding,  the  money 
deposited  in  payment  of  check  books.  This  money  is  left  to  draw  in- 
terest and  to  meet  demands,  in  the  hands  of  the  bankers,  through  whom 
the  check  books  are  issued.  These  checks  are  being  used  largely  by 
travelers  instead  of  letters  of  credit.  The  American  and  other  express 
companies  have  a  form  of  check  which  is  very  similar  and  which  is 
used  largely  by  Americans  traveling  in  Europe. 

Bank    Statements. 

A  bank  statement  is  a  balance-sheet  of  the  bank's  main  ledger,  and 
is  sworn  to  by  the  cashier  and  attested  by  several  of  the  directors.  It 
is  published  at  the  time  of  its  making  in  the  local  newspapers.  The 
resources  in  such  a  statement  usually  consist  of  items  due  from  other 


BANKING,    COLLECTIONS, 


finance!  institutions,  bank  bills  and  specie  on  hand,  bonds  deposited 
with  the  United  States  treasurer;  loans  and  discounts,  consisting  of  dis- 
counted notes,  drafts,  etc.,  owned  and  held  by  the  bank  and  which  are 
maturing  and  being  paid  from  day  today;  real  estate,  etc.  The  lia- 
bilities consist  of  the  accounts  due  depositors  and  other  banks;  out- 
standing circulation  of  bank  notes;  undivided  profits;  surplus  fund  ; 
original  capital  stock,  etc. 


Condition    of    National    Banks. 

The  statement  given  below  is  an  abstract  of  reports  made  to  the 
comptroller  of  the  currency,  showing  the  condition  of  the  national 
banks  of  the  United  States  at  the  close  of  business  on  a  particular  day. 
(Cents  omitted.) 


RESOURCES. 


Loans  and  discounts $1,951,846,822 

Overdrafts 13,528,536 

U.  S.  bonds  to  secure  circula- 
tion        195.787.200 

U.  S.  bonds  to  secure  deposits        26.405,350 

U.  S.  bonds  on  hand 25,115,540 

Premiums  on  U.  S.  bonds 16,511.917 

Stocks,  securities,  etc 196,927,758 

Banking  house,  furniture  and 

fixtures 77,075,488 

Other  real  estate   and   mort- 
gages owned 24,193,994 

Due  from  National  banks  (not 

reserve  agents) 114,702.531 

Due    from   State   banks    and 

bankers 29,273,688 

Due    from   approved   reserve 

agents 222,467.685 

Checks  and  other  cash  items...  12.424,519 
Exchanges  for  clearing-house,  77.343,972 
Bills  of  other  National  banks..  18,436,845 
Fractional  paper  currency, 

nickels  and  cents 1,002,373 

Lawful  Money  Reserve  in  Bank, 
viz. 

Gold  coin, $120,855,575 

Gold  Treasury 

certificates..    25,400,860 
Gold  clearing- 
house cert's,    31,904, 
Silver  coin,  dol- 
lars      7,263,610 

Silver  Treasury 

certificates..    29,550,637 
Silver  coin,frac- 
tional 5,956,959 

Total  specie 220,931.641 

Legal  tender  notes.113,281,622 
U.S.  certificates  of 

deposit  for  legal 

tender  notes 31,655,000 


Five  per  cent,  redemption  fund 

with  Treasurer 8,527,580 

Due  from  U  S.  Treasurer 1,080,461 


Total 


$3,378,520,536 


LIABILITIES. 


Capital  stock  paid  in. 
Surplus  fund 


$   662,100,100 
246,180.065 


Undivided   profits,    less   Ex- 
penses and  Taxes  paid 

National  bank 

notes  iss'd*          $175,408,528 
Less  amount 

on  hand 5,653,436 


Amount  outstanding 169,755,091 


State   bank    notes   outstand- 
ing  

Due  to  other  National  banks, 

Due    to    State    Banks   and 
bankers 


Dividends  unpaid 

Individual  deposits  .. 
U.  S.  Deposits ., 


Deposits  of  U.  S.  disbursing 
officers 

Notes      and     bills     redis- 
counted  


Bills  payable 

Liabilities   other  than  those 
above  stated 


66,173 
314,430,137 

180,970,705 

1,287,568 

1,667,843,286 

24,558,195 

3,491,787 

6,853,317 
13,645,026 

3,413,741 


Total $3,378,520,536 


This  statement  is  made  up  from  the  statements  of  all  the  banks 


AND    NEGOTIABLE   PAPER. 


and  in  character  it  is  similar  to  the  statement  usually  submitted  by  any 
one  bank. 


Bank    Debits    and    Credits. 

The  bank's  debits  for  any  day  may  consist  of  i.  Deposits — the 
gross  amount  of  money  received  on  deposit.  2.  Matured  Loans — notes 
discounted  that  have  been  paid.  3.  Interest — money  received  for  in- 
terest from  all  sources.  4.  Exchange — money  received  as  exchange  on 
collections.  5.  Discount — the  discount"  on  notes  and  other  commercial 
paper,  6.  Uo  S.  Treasury — remittances  received  in  payment  for  notes 
sent  for  redemption.  '/•  Circulation — new  bank  notes  of  the  bank's 
own  issue  received  from  the  comptroller  of  the  currency.  The  bank's 
credits  may  consist  of  r.  Checks — paid  during  the  day.  2.  -Loans — 
gross  amount  of  net  proceeds  of  paper  discounted.  3.  Expense — 
running  expenses  of  the  bank.  4.  Interest — on  deposits  and  rebates 
on  prepaid  discounted  paper.  5.  Exchange — cost  of  collections  made, 
charges  on  foreign  paper,  etc.  6.  Dividends — paid  stockholders.  7. 
U.  S.  Treasury — cash  sent  for  new  small  legal  tenders,  etc.  8.  Cir- 
culation— notes  of  the  bank's  own  issue  retired  in  any  way. 

Condition    of   State    Banks. 

The  following  table  gives  the  aggregate  resources  and  liabilities  of 
the  state  banks  at  the  close  of  a  particular  year : 


RESOURCES. 


December  31, 
189- 


Loans  and  discounts $6,993,372 

Overdrafts 10,020 

Due  from  banks I>3I3»I47 

Cash  on  hand 599*625 

Stocks  and  bonds. ,    .  860,171 

Banking  house 215,675 

Other  real  estate 76,015 

Furniture  and  fixtures 32,928 

Bonds  and  mortgages .    .    .    °  112,799 

Current  expenses  and  taxes  paid 33»68o 

Checks  and  other  cash  items .    . 44»323 

Other  assets. 18,360 

Total  resources #10,310,130 

LIABILITIES. 

Capital  stock $1,684,360 

Surplus  fund 916,100 

Undivided  profits ....    .    .    .    .    .        .  224,827 

Dividends  unpaid  .    .    , .,,.... l6'     7 

Due  depositors .   .    •    •  7,160,010 

Due  to  Banks I99.9Q4 

Notes  and  bills  re-discounted 68,425 

Bills  payable  .    . .    „   .   .    „    .    .   .    ,   .    .    .    .    .    • '  39,ooo 

Other  liabilities .   e   .   „    ...«..»..••  °f5 

Total  liabilities  ,  .  .   , 


BANKING,    COLLECTIONS, 


Condition    of    Savings   Banks. 

The  following  table  shows  the  aggregate  resources  and  liabilities 
of  the  savings  banks  of  a  particular  state  at  the  beginning  of  189-. 
The  table  also  sets  forth  the  character  of  the  assets  and  the  proportion 
which  each  kind  bears  to  the  whole  : 


RESOURCES. 


Jan.  /,  189-. 


Bonds  and  mortgages $16,803,397 

United  States  bonds 4,832,472 

District  of  Columbia  3.65  bonds 541,200 

Bonds  of  the  State  of  New  Jersey I7>5°5 

Bonds  of  cities  in  this  State 4>955»73& 

Bonds  of  counties  in  this  State 1,299,690 

Bonds  of  towns  and  townships  in  this  State 942,416 

Bonds  of  boroughs  and  villages  in  this  State 152,368 

Bonds  of  cities  in  other  States 290,395 

Bonds  of  counties  in  other  States 15,800 

Railroad  bonds  (first  mortgage) 5»3I7,393 

Other  bonds  and  stocks 357>87i 

Call  loans  on  collaterals 978,366 

Banking-house  properties 675,889 

Other  real  estate 447,913 

Cash  deposited  in  banks  and  trust  companies 1,420,221 

Cash  on  hand 386,400 

Interest  due  and  accrued 524,255 

Other  assets 36*463 

Total  resources $39,995, 752 

LIABILITIES. 

Amount  due  depositors $36,149,920 

Other  liabilities I34,4o6 

Surplus 3,711,426 

Total  liabilities $39>995»752 

The    Value    of  Paper    Offered    for    Discount. 

•  One  of  the  most  valuable  parts  of  a  banker's  education  is  to  learn 
whom  to  trust.  Every  bank  should  have  a  well-organized  and  thoroughly 
equipped  credit  department,  in  charge  of  some  one  who  can  be  relied 
upon  to  investigate  carefully  all  names  referred  to  him  by  the  officers. 
A  man  who  desires  to  borrow  money  from  a  bank  should  offer  the  same 
confidence  that  he  would  offer  if  he  were  going  to  a  wholesale  dealer  to 
buy  goods.  The  merchant  has  a  commodity  to  sell  and  he  looks  for 
facts  which  will  aid  him  in  determining  the  line  of  credit  to  be  granted. 
The  banker  has  money  to  sell  and  he  should  be  doubly  sure  of  the 
responsibility  of  the  party  to  whom  he  is  selling  it  because  the  money 
does  not  belong  to  him.  A  banker  has  the  right  to  expect  the  fullest 


AND  NEGOTIABLE  PAPER.  8$ 

confidence  on  the  part  of  the  borrower,  and  the  borrower  should  furnish 
him  with  a  complete  and  detailed  statement  of  the  condition  of  his 
affairs.  It  is  safe  to  conclude  that  when  a  borrower  refuses  absolutely 
to  give  any  information  as  to  his  financial  condition,  his  credit  is  not 
in  the  most  favorable  condition.  Many  of  the  banks  have  blank  forms 
which  they  from  time  to  time  ask  borrowers  to  fill  out.  These  state-  , 
ments  show  in  detail  the  assets  and  liabilities  of  the  firm  in  question; 
they  show  the  notes  which  are  outstanding,  the  mortgages  on  real 
estate,  and  many  other  particulars  including  the  personal  or  individual 
credit  of  members  of  the  firm,  if  a  partnership.  The  total  net  worth 
of  the  borrower  should  be  first  considered  ;  then  the  character  of  his 
business,  whether  it  is  speculative  or  staple ;  then  his  record  and  stand- 
ing in  the  community;  then  his  business  habits;  then  a  consideration 
of  whether  he  is  in  enterprise  abreast  with  modern  ideas  and  methods. 
The  paper  offered  for  discount  is  of  a  variety  of  kinds.  The  larger 
proportion  of  it  is  from  customers  of  the  borrower  who  have  extended  " 
their  credit  by  paying  their  accounts  hi  notes  instead  of  in  cash.  Such 
paper  is  really,  though  having  two  names,  very  little  better  than  single- 
name  paper,  for  it  is  not  the  maker's  credit,  but  the  payee's,  which  the 
bank  usually  considers.  Many  very  small  notes  offered  for  discount 
usually  indicate  a  very  needy  condition.  There  are  times  when  the 
character  of  the  merchandise  owned  by  the  borrower  should  be  con- 
sidered. What  would  it  bring  under  the  hammer?  Groceries  and  raw 
material  can  usually  be  turned  into  cash  at  a  forced  sale  at  very  small 
discount  from  current  prices.  Not  so  with  hardware,  glass,  dry  goods, 
boots  and  shoes,  books,  etc.  Machinery  and  fixtures -are  not  a  bank- 
able, asset  upon  which  to  base  credit.  The  banker  should  note  his 
borrower's  bills  payable.  Why  did  he  give  notes?  Are  they  met 
promptly  ?  Many  houses  prefer  to  sell  their  own  paper  in  the  open 
market  and  keep  their  banks  open  for  accommodations  when  they  are 
unable  to  secure  outside  credit.  The  insurance  carried  should  be  con- 
sidered, also  the  volume  of  business  done.  A  large  business  on 
moderate  capital,  with  long  credits,  will  naturally  have  large  liabilities, 
while  a  small  business,  with  liberal  capital,  and  short  credits,  should 
have  small  liabilities.  There  are  many  firms  which  carry  two  or  more 
bank  accounts  and  others  who  sell  their  paper  to  out-of-town  banks. 
In  buying  paper  it  is  important  to  ascertain  whether  the  firm  is  in  the 
habit  of  taking  up  paper  at  one  bank  by  floating  a  loan  at  another.  A 
prominent  banker  classifies  paper  as  to  its  discount  value  as  follows : 
i.  Bankers'  paper  including  bills  of  exchange.  2.  Remittance  paper — 


86  BANKING,    COLLECTIONS, 

bills  drawn  by  houses  abroad  on  banks  or  correspondents  in  Europe. 
3.  Inland  drawn  paper — bills  drawn  by  shippers  of  goods  on  the  houses 
to  whom  the  goods  are  shipped.  4.  Brokers'  paper — bills  drawn  by 
importers  against  commodities  placed  in  brokers'  hands  for  sale.  5. 
Trade  paper — bills  arising  out  of  our  manifold  trades  and  industries. 
6.  Drafts  with  bills  of  lading  attached.  7.  Paper  having  personal  en- 
dorsements. 8.  Paper  secured  by  collateral.  9.  Individual — or  one- 
name  paper. 

Mercantile    Agencies. 

In  large  cities  and  towns,  bankers  and  other  business  men  should 
avail  themselves  of  the  advantages  offered  by  mercantile  agencies. 
These  concerns  report  to  their  subscribers  upon  the  credit  of  men  in 


,„ .„_ ._  V/W.  OolAAAjCLAA.C^_____ after  date,    AAjHE.- ...promise  to  pay  to  the  order  of 

TcnVK- NaYiot\a\  Bank  ....oV-T3 CRT* LAND— 11^1 

turo  $UJUl*.JiflJt-cL - -          '.  ,_"._ -    DOLLARS, 

with  Interes't  from  date,  without  defalcation,  for  value  received  ,  and  have  delivered  with  this  note,  as  collateral  security, 


and  do  agree,  on  demand,  to  deposit  with  the  holders  such  additional  security  as  they  may  from  time  to  time  require,  and  in  default  thereof  this  note  shall  in 

or  default  in  depositing  additional  security  as  above  agreed,  do  hereby  authorize  and  empower  the  holders  hereof  for  the  purpose  of  liquidation  of  this  note,  and 
of  all  interest  and  costs  thereon,  to  sell,  transfer,  and  deliver  the  whole  or  any  part  of  such  security,  or  any  additions  thereto,  or  substitute  therefor  wtlhout  any 
previous  demand,  advertisement  or  notice,  either  at  brokers'  board  or  public  or  private  sale,  at  any  time  or  times  thereafter,  with  the  right  on  the  part  of  such 
holders  to  become  the  purchaser  and  absolute  owner  thereof,  free  of  all  trusts  and  claims.  And  it  is  further  agreed  that  the  securities  hereby  pledged,  together 
with  any  that  may  be  pledged  hereafter,  shall  be  applicable  in  like  manner  to  secure  the  payment  of  any  past  or  of  any  future  obligations  of  the  undersigned  held 
by  the  holders  of  this  obligation,  and  all  such  securities  in  their  hands  shall  stand  as  one  general  continuing  collateral  security  for  the  whole  ol  said  obligations, 
so  that  the  deficiency  on  any  one  shall  be  made  good  from  the  collaterals  for  the  rest,  hereby  remaining  responsible  for  any  deficiency  in  payment,  and  waiving 
any  benefit,  exemption,  or  privilege  under  any  law  now  or  hereafter  to  be  in  force. 


various  lines  of  business.  They  gather  their  information  from  a  variety 
of  sources.  This  service  has  been  very  much  perfected  of  late  years, 
and  after  making  all  due  allowance  for  the  inherent  defects  of  the  sys- 
tem, it  is  still  a  useful  adjunct  to  the  man  who  is  giving  credit.  Brad- 
streets  and  Dun  &•  Co.,  are  the  two  largest  mercantile  agencies  in  this 
country. 

Savings    Banks. 

Savings  banks  have  no  special  capital  owned  by  stockholders. 
Their  capital  is  the  money  received  on  deposit,  which,  of  course,  is  the 
property  of  a  great  many  people.  Every  depositor  is  an  owner  in  the 
bank,  and  the  profit  is  paid  to  depositors  in  interest.  This  capital  is 
invested  in  choice  securities.  The  corporation  is  simply  the  agent  or 
trustee  of  the  whole  body  of  depositors,  and  works  for  their  account 
and  benefit  and  not  for  its  own.  In  most  of  the  states,  the  savings 


AND    NEGOTIABLE   PAPER. 


bank*  are  organized  under  State  laws  and  are  in  a  limited  way  under 
State  supervision.  Their  chief  purpose  is  to  encourage  the  saving  of 
money  by  the  common  people.  In  some  countries  government  savings 
banks  have  been  established.  In  Canada  almost  every  post  office  is  a 
branch  of  the  government  post  office  savings  bank. 

Demand    Collateral    Note. 

An  illustration  is  given  on  page  86  of  a  demand  collateral  note.  The 
bank  loans  money  payable  on  demand  and  accepts,  in  this  instance, 
railroad  stock  as  security.  The  stock  is  held  by  the  bank  until  the  note 
is  paid,  and  if  not  paid,  the  stock  becomes  the  property  of  the  bank. 

Certificate    of  Deposit. 

If  you  deposit  money  temporally  in  a  bank  for  safe  keeping  you 
will  receive  a  receipt  therefor.  This  receipt  is  usually  called  a  certifi- 


jfe^-^Kojvclui^  Ttftf- 

™^=w          ,;  .     sr    7x/9 


cate  of  deposit.  See  illustrations.  It  often  occurs  that  such  certificate 
is  used  instead  of  a  bank  draft,  in  the  payment  of  distant  bills.  Interest 
is  allowed  under  certain  conditions.  It  is  practically  a  bank's  check 
on  itself.  In  issuing  certificates  of  deposits  to  strangers  the  bank 
should  take  their  signatures  upon  the  margin  of  the  certificate  book,  so 
that,  when  the  certificates  come  home  for  redemption,  the  endorsement 
may  be  compared  with  this  original  signature,  if  it  seems  necessary. 
Of  course  every  properly  managed  bank  has  a  ledger  account  of  cer- 
tificates of  deposits  issued,  which  is  a  full  record  of  the  amounts  and 
names  of  all  certificates  issued,  together  with  their  dates  and  numbers. 
Returning  certificates  can  be  compared  with  this  record  as  they  are  pre- 
sented for  payment  through  clearing-houses  and  over  the  counter. 


Waiver   of  Demand   and   Notice* 

All  endorsed  demand  notes  held  by  a  bank  should  start  with  a 


83 


BANKING,    COLLECTIONS, 


waiver  of  demand  and 
notice  by  the  endorser, 
since  in  time  (in  some 
states  in  60  days)  en- 
dorsers are  lost — unless 
a  demand  for  payment 
is  made  upon  promisors 
— if  this  precaution  has 
not  been  attended  to. 

Usury  and  its  Penalty. 

The  laws  of  some 
of  the  states  for  col- 
lecting more  than  the 
legal  rate  of  interest  are 
quite  severe.  National 
banks  which  collect 
more  than  the  legal  rate 
can  only  be  proceeded 
against  under  the  U.  S. 
Interest  Penalty  Act 
which  provides  that 
usury  shall  be  punished 
by  a  forfeiture  of  twice 
the  amount  of  interest 
paid,  if  action  is  com- 
menced within  two  years 
of  the  time  of  such 
usurious  practice,  and 
that  recovery  can  be  had 
for  the  entire  amount  of 
interest  paid  at  any  time. 

Bank    Examinations. 

National  banks  are 
examined  once  or  twice 
a  year  by  the  United 
States  Bank  Examiner 
who  has  authority  from 
the  Comptroller  of  the 


AND    NEGOTIABLE    PAPER.  89 

Currency  to  whom  his  reports  are  made.  These  reports  are  seldom  if 
ever  seen  by  bank  officers,  and  unless  the  examiner  chooses  to  inform 
them  that  everything  is  right  they  are  none  the  wiser.  When  a  Na7 
tional  Bank  becomes  embarrassed  it  is  the  business  of  the  Bank  Exam- 
iner to  look  thoroughly  into  its  affairs  and  if  necessary  to  close  its 
doors. 

A   Judgment   Note. 

Some  of  the  states,  noticeably  Pennsylvania,  have  a  form  of  prom- 
issory note  called  a  judgment  note.  In  this  form  of  note  the  maker 
confesses  judgment  if  the  note  is  not  paid  and  authorizes  the  court  to 
take  possession  of  sufficient  of  his  property  immediately  to  satisfy  the 


Duo 


amount  of  the  claim.     It  is  really  a  very  severe  form  of  contract  and 
should  be  given  only  under  the  most  extreme  conditions. 

Suggestions   to    Bank    Depositors. 

Don't  exaggerate  your  financial  condition.  The  bank  has  a  his- 
tory of  it  on  its  books.  Do  not  borrow  money  to  swell  your  deposits. 
Don't  ask  for  special  favors  in  the  way  of  credit ;  good  security  is  all 
the  bank  asks.  Your  intercourse  with  bank  officers  should  be  candid 
and  courteous.  Make  your  deposit  as  early  in  the  day  as  possible. 
Never  exchange  checks  to  make  large  deposits.  Never  make  deposits 
without  your  bank  book.  Avoid  unnecessary  conversation  with  the 
clerks.  Make  it  an  invariable  rule  to  give  checks  only  out  of  your  own 
check  book.  Never  give  out  checks  dated  ahead.  Always  consider  a 
check  paid  when  you  give  it  out  and  mark  the  amount  from  your  bal- 
ance. Let  all  your  dealings  be  strictly  honorable. 
7 


BANKING,    COLLECTIONS, 


Exchange    Terms. 

There  are  several  terms  used  in  connection  with  exchange  which 
should  be  understood.  Bankers1  Bills  of  exchange  are  bills  drawn  by 
bankers  on  bankers.  Commercial  Bills  are  those  based  upon  move- 
ments of  merchandise,  and  drawn  by  merchants.  Documentary  Bills 
are  those  which  are  accompanied  by  bills  of  lading.  Normal  exchange 
rates  are  those  quoted  in  newspapers ;  there  are  lower  or  inside  rates 
which  are  made  to  brokers  through  whom  most  of  the  buying  and  sell- 
ing is  done. 

Collection    Laura. 

An  attachment  is  a  writ  issued  at  the  commencement  of,  or  during 
a  suit  at  law  in  court,  commanding  the  sheriff,  or  other  proper  officer, 
to  attach  the  property  of  the  defendant,  to  satisfy  the  demands  of  the 
plaintiff.  The  property  of  corporations  may  be  attached  as  well  as  that 
of  individuals.  By  this  process  the  plaintiff  gains  a  lien  on  the  at- 
tached property,  which  lien  will  await  the  judgment  of  the  court  in  the 
suit.  In  many  of  the  states  the  defendant  may  dissolve  the  attachment 
by  giving  a  bond,  with  sureties,  that  he  will  pay  such  judgment  as  the 
plaintiff  may  obtain  in  the  suit.  A  suit  is  ended  by  the  court's  giving 
a  final  judgment,  either  for  the  plaintiff  or  for  the  defendant,  at  the 
same  time  fixing  the  amount  in  dispute,  if  judgment  is  for  the  plaintiff. 
Execution  is  the  act  of  carrying  into  effect  the  final  judgment  of  a 
court.  If  property  of  any  kind  is  sold  under  execution,  the  proceeds 
go  to  satisfy  the  judgment  and  any  costs  or  charges;  and  then,  if  there 
is  any  surplus,  it  belongs  to  the  defendant.  By  the  homestead  and 
exemption  laws  of  many  states,  certain  kinds  and  amounts  of  property 
are  exempted  from  attachment  and  sale  on  execution.  By  garnishment 
or  trustee  process  is  meant  the  attaching  of  money  or  goods,  due  a  de- 
fendant, in  the  hands  of  a  third  person.  By  exemption  is  meant  the 
right  given  by  law  to  a  debtor  to  retain  a  portion  of  his  property  free 
from  a  sale  on  execution  at  the  suit  of  a  creditor. 


EXAMINATION  QUESTIONS. 

1.  Give  some  particulars  in  which  the  Bank  of  England  differs 
from  our  larger  National  Banks. 

2.  Enumerate  some  of  the  advantages  afforded  to  the  community 
and  to  commerce  in  general  by  banking  institutions. 

3»  What  in  a  general  sense  is  meant  when  we  speak  of  the  cur- 
rency of  a  country?  Is  the  same  thing  meant  when  we  speak  of  the 
cash  circulation  of  a  country  ? 

4«  Tell  how  you  would  proceed  to  open  an  account  with  a  bank. 
Make  a  copy  of  a  deposit  ticket  containing  a  record  of  bills,  gold, 
silver,  checks,  and  an  express  money  order. 

5»  Give  in  brief  the  duties  of  each  of  the  following  bank  officers : 
president,  cashier,  paying  teller,  receiving  teller,  discount  clerk,  book- 
keeper, attorney,  messenger. 

6.  A  bank  check  is  a  demand  order  for  money,  drawn  by  one  who 
lias  funds  in  the  bank.  How  does  a  check  differ  from  an  order  on 
John  Smith  to  pay  bearer  a  certain  sum  of  money? 

7"  How  does  a  check  differ  from  a  sight  draft? 

8.  Why  is  it  important  that  blank  checks  should  be  very  carefully 
written  up?  Illustrate. 

9-  A  check  has  no  date.  Does  this  make  it  void  ?  How  about  a 
check  dated  months  ago?  Is  a  check  dated  on  Sunday  good?  How 
about  a  note?  Why  are  checks  sometimes  dated  ahead?  Is  it  neces- 
sary that  your  check  be  written  on  the  prescribed  blank  form  ?  Are 
you  at  liberty  to  print  your  own  form  of  check? 

10.  Write  out   in  full  in  the  form  of  a  business  letter  the  check 
which  you  find  on  page  15. 

11.  How  would  you  write  a  check  for  75  cents? 

12.  Describe  some  of  the  common  safety  devices  for  protecting 
checks  against  fraudulent  persons. 

I3«  You  present  a  check  for  payment  at  a  bank  where  you  are  un- 
known. The  paying  teller  asks  for  a  satisfactory  identification.  You 
and  he  have  no  common  acquaintance  who  can  identify  you.  How 
would  you  proceed  to  show  that  you  were  really  the  person  you  repre- 
sent yourself  to  be? 


92  BANKING,    COLLECTIONS, 

14.  How  would  you  word  a  check  to  give  to  a  person  who  is  un* 
known  at  your  bank  but  who  wishes  to  draw  the  money  over  the  counter  ? 

I5»  You  are  sending  a  check  through  the  mails  to  John  Brown, 
Chicago.  How  will  you  prevent  the  check  from  falling  into  the  hands 
of  the  wrong  Brown  ? 

16.  You  are  spending  a  few  days  with  a  business  friend  in  his  city. 
You  receive  a  check  for  $100  and  wish  to  get  it  cashed.  How  can  your 
friend  secure  for  you  the  prompt  payment  of  the  money  at  his  bank  if 
he  is  unable  to  go  with  you  for  the  purpose  of  identification  ? 

17'  You  identify  A.  B.  at  your  bank.  The  check  A.  B.  presented 
turns  out  to  be  a  forgery.  Are  you  responsible  ? 

18.  You  receive  a  forged  check  from  A.  B.  which  you  in  good 
faith  endorse  and  get  cashed.     The  bank  finds  out  that  it  is  a  forgery. 
Can  they  hold  you  responsible  ? 

19.  A.  B.  transfers  a  check  to  you  by  a  blank  endorsement.     It  is 
then  payable  to  bearer.     How  can  you  legally  make  it  payable  to  your 
order  ? 

20.  A.  B.  gives  C.  D.  a  check  drawn  to  his  order.     C.  D.  endorses 
it :     "  For  Deposit,  C.  D"     He  afterwards  hands  it  to  E.  F.  in  pay- 
ment of  a  bill.     Can  E.  F.  cross  out  the  "  For  Deposit?" 

21.  How  will  you  write  a  check  to  draw  money  from  your  own 
account  ? 

22.  You  are  treasurer  of  Bethany  Church.     You  receive  a  check 
drawn  payable  to  the  order  of  "Bethany  Church"     How  should  you 
endorse  the  check  ? 

23.  What  is  meant  by  power-of-attorney  ?     How  should  an  attor- 
ney endorse  checks  for  any  person  for  whom  he  is  acting? 

24.  The  words  "endorsement  guaranteed"  are  sometimes  found 
stamped  on  the  back  of  cancelled  checks.     What  is  meant  ? 

25.  You  are  buying  a  draft  on  New  York  and  are  paying  for  it  at 
your  own  bank  by  your  check  :   how  will  you  word  the  check  ? 

26.  A  check  which  you  deposited  some  days  previously,  is  returned 
to  you  marked  "  No  funds."     Explain.     What  would  you  do  in.  such  a 
case  ? 

27.  How  can  the  payment  of  a  check  be  stopped  ? 


AND   NEGOTIABLE   PAPER.  93 

28.  What  is  a  certified  check  ?     Note  the  illustration  on  page  22. 
Why  is  it  made  payable  through  the  clearing-house?     When  is  it  cus- 
tomary to  get  checks  certified  ? 

29.  Why  are  bank  drafts  more  acceptable  in  trade  than  individual 
checks  ? 

30.  What  are  the  advantages  and  what  the  disadvantages  of  mak- 
ing collections  by  commercial  drafts  ? 

3i«  A  of  Philadelphia  draws  at  30  days  on  B  of  Lynn  in  favor  of 
C  of  Boston.  Follow  the  draft  from  the  time  it  leaves  A's  hands  until 
B  files  it  away  as  a  note  which  he  has  paid. 

32.  "  In  this  city  call  loans  are  quoted  at  3  @  4  per  cent,  and  time  paper  at 
3j£  @  6  per  cent.     In  New  York  the  quotation  for  time  money  on  collateral  is  I  @ 
3  per  cent,  for  all  dates  ;  for  commercial  paper  3  @,  $}4  Per  cent." 

Explain  the  meaning,  in  a  commercial  sense,  of  the  phrases 
printed  in  italics. 

33.  "Commercial  paper  is  in  good  demand  by  all  the  usual  buyers,  but  the 
scrutiny  of  the  names  is  very  rigid,  for,  with  the  low  rates  ruling,  buyers  do  not  care 
to  take  the  risk  of  failure  to  meet  the  notes  at  maturity." 

Who  are  the  usual  buyers  ?  Why  is  the  scrutiny  of  the  names 
rigid  ?  What  risk  do  buyers  take  and  under  what  circumstances  are 
they  obliged  to  meet  the  notes  at  maturity  ? 

34-  If  a  note  were  about  to  be  transferred  to  you  by  endorsement 
and  delivery  in  payment  of  a  debt,  would  it  make  any  difference  to  you 
whether  or  not  it  was  overdue?  Explain  in  full. 

35 •  What  are  the  advantages  to  the  banks  of  a  city  of  their  central 

clearing-house? 

36.  Show  how  all  the  banks  of  the  world  are  connected  through 
the  clearing-house  system.  Illustrate  by  showing  how  a  draft  on  a 
merchant  in  York,  England,  would  be  collected  by  a  manufacturer  in 
Elgin,  111. 

37-  I  find  the  number  27  stamped  in  large  figures  on  the  face  of  a 
cancelled  check.  What  does  it  mean  ? 

38.  How  do  state  and  national  banks  differ  as  to  their  organiza- 
tion ?  How  do  banks  differ  from  trust  companies  ? 

39-  To  what  do  bankers  give  the  name  kiting? 

40.  Who  is  liable  when  ajbrged  check  has  been  paid  ? 


94  BANKING,    COLLECTIONS, 


41.  What  is  standard  gold  worth  an  ounce?     What  is  the  weight 
of  a  $20  gold  piece? 

42.  Describe  in   detail  the  various  kinds  of  United   States  bills 
which  pass  as  cash.     How  do  these  bills  differ  from  promissory  notes? 

43»  A  bank  note  is  very  much  mutilated  and  fully  three-tenths  of 
it  is  gone  entirely.  It,  however,  shows  the  name  of  the  bank  and  the 
signature  of  one  of  its  officers.  Will  it  be  paid  in  full? 

44.  Distinguish  between  discounting  and  buying  paper  as  these 
terms  are  used  by  bankers. 

45-  A  national  bank  has  a  capital  of  $500,000.  A  customer  asks 
for  a  loan  of  $62,000  on  endorsed  paper.  Can  the  bank  legally  grant 
the  loan  ? 

46.  A  national  bank  has  $6,000  on  deposit  with  the  "United  States 
treasurer  for  146  days,  drawing  interest  at  3  per  cent.     How  much  in 
terest  should  be  paid  ?     (Ans.  $72). 

47.  What  is  meant  by  borrowing  money  on  collaterals  ?     How  is 
this  done  ? 

48.  Explain  the  meaning  of  negotiable. 

49.  Explain   how  a   non-negotiable   promissory   note  should   be 
worded. 

50.  A  note  is  drawn  March  i,  at  4  months  after  date.     When  will 
it  mature  if  in  New  York  ?     When  in  Philadelphia  ? 

51.  A.  B.  gives  C.  D.  a  note  in  which  he  promises  to  pay  a  bill  of 
$200  in  potatoes  at  market  value.     Is  such  a  note  negotiable  ?     Is  it  j 
good  contract  ? 

52.  A.  B.  wishes  to  borrow  credit  from  C.  D.  in  the  form  of  an 
accommodation   note.     How  should  such  a  note  be  worded  ?     Why 
should  C.  D.  be  the  payee  if  A.  B.  does  not  owe  him  anything? 

53.  A  steals  a  horse  from  B  and  sells  it  to  C.     B  finds  the  horse 
in  C's  field  and  takes  it.    If  it  were  a  promissory  note  instead  of  a  horse, 
would  C  have  a  good  title  to  it? 

54«  If  an  endorser  is  compelled  to  pay  a  note  against  whom  has 
he  a  good  claim  ? 

55-  A  note  is  drawn  payable  to  the  order  of  A.  B.  How  "can  A. 
B.  transfer  it  without  becoming  liable  for  rte  payment  ? 


AND    NEGOTIABLE    PAPER.  95 

56.  Why  and  how  are  notes  protested  ?  Why  is  a  formal  protest 
sometimes  desired  even  though  the  paper  bears  no  endorsements? 

57-  Tell  how  you  would  receipt  for  a  payment  on  a  note.  Why  is 
not  an  ordinary  separate  receipt  sufficient? 

58.  A  note  is  worded  "  I  promise  to  pay  "  and  is  signed  by  two 
persons.  Is  either  responsible  for  the  whole  amount  or  for  only  one- 
half  the  amount  ? 

59»  Write  out  in  full  in  the  form  of  a  business  letter  the  commer- 
cial draft  which  you  find  on  page  32. 

60.  A  sight  draft  for  $200   is   presented  for  payment  by  a  bank 
messenger  at  your  office.     You  have  money  on  deposit  but  have  not 
$200  in  bills  convenient.     The  messenger  will  not  take  your  uncertified 
check.     How  can  you  meet  the  conditions  ? 

61.  Dombey  &  Son  give  David   Copperfield  a  check  on  the  Na- 
tional State  Bank  of  Camden,  N.  J.,  for  $27.13.     Copperfield  transfers 
the   check  to  you  by  endorsement   and  you   endorse  it  for   deposit. 
Make  a  copy  of  both  sides  of  the  check. 

62.  On    Monday  morning   you   have   cash  $94.27  in    your  cash 
drawer,  and  the  balance  in  your  bank  to  your  credit  is  $496.25.     Dur- 
ing the  day  you  receive  bills  and  silver  $537.46,  and  a  check  for  $94.59, 
and    you    pay  out   in   cash   (bills  and   silver)   $243.18.     You  deposit 
$219.83,  and  you  issue  three  checks  ($29.13;   $14.85  ;  $46.17)  inpay- 
ment of  bills.     On  Tuesday  morning  you  deposit  all  the  cash  on  hand. 
What  should  your  bank  balance  be  then  ? 

63.  How  are  out-of-town  notes  collected  ?    When  would  you  con- 
sider it  wise  and  when  unwise  to  take  a  note  in  settlement  of  an  ac- 
count?    How  would  you  proceed  to  get  a  note  discounted  at  your 
bank? 

64.  How  would  you  endorse  a  check  in  your  favor  upon  the  face 
of  which  your  name  is  written  incorrectly? 

65.  Chas.  James  owes  you  $320.     He  is  considered  a  bad  pay  but 
he  has  property.     Would  it  be  advisable  to  get  a  note  from  him  in  set- 
tlement ? 

66.  What  are  the  advantages,  if  any,  of  holding  a  note  already 
matured  rather  than  in  taking  a  renewal  ? 

67.  Who  should  pay  the  protest  fee  of  protested  paper? 


BANKING,    COLLECTIONS, 


68.  Is  it  a  criminal  offence  (i)  to  draw  a  check  for  more  money 
than  you  have  on  deposit,  (2)  to  draw  a  check  on  a  bank  where  you 
have  no  money  on  deposit  ? 

69.  If  there  are  no  endorsers,  is  an  unpaid  note  as  good  after 
maturity  as  before  ? 

70.  Is  there  any  limit  to  the  number  of  endorsers  on  a  note  ? 

71*  What  would  be  the  effect  upon  foreign  exchange  quotations 
under  each  of  the  following  conditions  : 

1.  Very  large  importations  of  foreign  goods. 

2.  Discovery  of  very  productive  gold  mines  in  the  United  States. 

3.  American  goods  or  products  not  wanted  abroad. 

4.  American  securities  in  great  demand  abroad. 

5.  Export  trade  entirely  by  American  ship-owners. 

6.  Rates  of  interest  lower  here  than  in  Europe. 

7.  Large  numbers  of  Americans  traveling  in  Europe. 

8.  Heavy  interest  payments  on  securities  owned  abroad. 

9.  Gold  carried  free  by  all  shippers. 

IO.  Cost  of  shipping  gold  very  much  increased. 

72.  Contrast  the  Canadian  banking  system  with  that  of  the  United 
States,  pointing  out  some  of  the  advantages  of  each. 

73»  Explain  briefly  the  meaning  or  purpose  of  "  instruments  of 
credit,*'  "  safe-deposit  vaults,"  "  fidelity  insurance,"  "  seignorage," 
"sterling  exchange,"  "letter  of  credit,"  "fiat  money,"  "clearing- 
house certificate,"  "duplicate  bills  of  exchange,"  "a  bank's  corres- 
pondents." 

74-  The  following  is  a  complete  list  of  the  items  appearing  in  a 
National  Bank's  weekly  report : 

Loans  and  discounts,  $3,320,699.     Capital  stock  paid  in,  $500,000.     Individual 

deposits,  $3,015,485.     Undivided  profits,  $ .     Overdrafts,  $5,216.    United 

States  bonds  to  secure  circulation,  $152,500.  United  States  bonds  on  hand,  $126,- 
650.  Premiums  on  United  States  bonds  accrued,  $9,695.  Surplus  fund,  $125,000. 
National  bank  notes  issued,  $135,485.  National  bank  notes  (own  issue)  on  hand, 
$14,625.  Securities  on  hand,  $304,206.  Banking  house  furniture,  $12,608.  Mort- 
gages owned,  $1,984.  Due  from  other  banks,$9O5,i68.  Checks  on  hand,  £18,- 
427.  Exchanges  for  clearing-house  on  hand,  $49,895.  Bills  of  other  national  banks 
on  hand,  $13,695.  Fractional  currency  on  hand,  $984.  Due  to  other  national 
banks,  $1,269,800.  Dividends  unpaid,  $1,176.  United  States  deposits  (with  us), 
$114,697.  Gold  coin  on  hand,  $188,402.  Gold  treasury  certificates  on  hand,  $121,- 
275.  Silver  dollars  on  hand,  $1,800.  Clearing-house  certificates  on  hand,  $5,000. 
Silver  treasury  certificate  on  hand,  $53,648.  Legal  tender  notes  on  hand,  $470,- 
416.  Five  per  cent,  redemption  fund  with  United  States  Treasurer,  $6,695. 


AND    NEGOTIABLE   PAPER.  97 


Make  a  neat  copy  of  these  items,  separating  them  into  resources 
and  liabilities,  and  showing  the  correct  "undivided  profits." 

75-  Tell  how  it  is  possible  for  a  young  man  of  good  character  but 
without  "  moneyed  "  friends  to  secure  bonds  for  his  faithful  conduct  in 
a  responsible  position. 

76*  How  does  Canadian  paper  money  differ  in  its  security  from 
American  paper  money  ? 

77-  Give  the  general  dating  and  credit  rules  which  custom  has  es- 
tablished with  reference  to  selling  on  credit  and  paying  monthly  bills. 

78.  A  man  buys  goods  on  March  23,  and  is  to  be  allowed  a  dis- 
count of  3  per  cent,  if  paid  within  30  days.  What  is  the  last  day 
upon  which  payment  can  be  made  and  the  discount  claimed  ? 

79*  What  is  the  usual  method  of  endorsing  drafts  placed  in  a  bank 
for  collection  ? 

80.  «  No  protest ;  tear  off  this  before  presenting"     Explain. 

81.  Why  are  drafts  attached  to  bills  of  lading  usually  drawn  at 
sight  or  at  one  day  ? 

82.  Explain  what  is  meant  by  a  set-off  to  a  claim. 

83.  In  what  leading  particulars  do  promissory  notes  differ  from 
contracts  ? 

84.  What  in  money  is  considered  legal  tender  ? 

85.  Can  you  give  any  reason  why  it  is  necessary  in  clearing-house 
management  to  have  rules  more  exacting  than  in  the  management  of 

ordinary  business  ? 

86.  A  new  national  bank  has  been  established  in  a  large  city. 
Can  the  clearing-house  of  that  city  refuse  to  admit  it  to  membership? 

87.  A  young  friend  wishes  to  open  a  bank  account.     He  has  had 
no  business  experience,  and  writes  to  you  for  advice.     Answer  his  letter 
fully. 

88.  What  are  the  advantages,  if  any,  of  making  your  notes  pay- 
able at  your  own  bank?     Ars  there  any  disadvantages? 

89.  When   rates   are  high,  bankers  prefer  to  deal  in  long-time 
paper.     Why  ? 

90.  John  Smith  deposited  $3,000  on  Jan.  2,  1880,  in  the  First 


98  BANKING,    COLLECTIONS, 

National  Bank  to  the  credit  of  his  son.     His  son  demands  the  money 
Jan.  2,  1897.     Can  he  demand  interest? 

9i«  Give  a  few  of  the  leading  differences  in  organization  and  man- 
agement between  trust  companies  and  banks. 

92.  A  is  a  debtor  to  B.     B  wishes  to  know  the  extent  of  A's  bank 
account.     Can  he  get  the  information  ? 

93.  Give  some  particulars  of  the  currency  famine  of  1893.     Was 
there  less  money  in  the  country  than  us.ua!  ?     To  what  extent  was  the 
emergency  currency  issued  by  many  mercantile  houses  illegal  ? 

94-  Discuss  fully  the  advantages  of  the  extensive  credit  system  of 
the  world's  trade  and  industry.     Has  it  any  important  disadvantages? 

95'  Why  are  bills  of  exchange  drawn  in  duplicate  ? 

96.   "The  imports  and  exports  of  bullion  is  the  real  test  of  ex- 
change."    Verify  the  truth  of  this  statement  by  added  explanation. 

97'  "  A  favorable  real  exchange  operates  as  a  duty  on  exportation, 
and  as  a  bounty  on  importation."     Explain. 

98.  Is  the  "balance  of  trade"  the  same  as  the  '-'balance  of  in- 
debtedness "  ? 

99»  Enumerate  conditions  which  will  make  an  exchange  expense 
on  a  large  draft  on  San  Francisco  bought  in  New  York. 

100.  Find  the  cost  of  freight  and  insurance  on  a  shipment  from 
New  York  to  London  of  a  million  dollars. 

101.  Account  for  the  fact  that  London  is  the  financial  center  of 
the  world. 

102.  What  is  meant  by  the  Latin  Union  in  the  world's  financial 
systems  ? 

103.  Describe  the  money  of  Great  Britain. 

104.  How  do  Canadian  $4-bills  differ  from  Canadian  $5 -bills  in 
the  matter  of  security? 

105.  Name  the  largest  bank  (i)  in  Europe,  (2)  in  North  America. 

106.  Where   is   the  Chemical  National  Bank  located  ?     Account 
for  the  fact  that  its  stock  sells  at  such  an  enormous  figure. 

107.  A  run  on  a  bank  such  as  is  not  infrequent  in  the  United 
States  is  unknown  under  the  Canadian  banking  system.     Account  foi 
this. 


AND    NEGOTIABLE    PAPER.  99 

108.  Describe  the  crossed  check  as  used  in  England.     Have  we 
the  same  idea  in  any  other  form  in  this  country  ? 

109.  In  a  London  paper  a  certain  stock  is  quoted  at  a  certain  price 
for  "  May  settlement."     What  is  meant  by  "  May  settlement  "  ? 

no.  Explain  in  detail  the  business  of  a  note  broker  giving  some 
particulars  of  his  responsiblity  in  connection  with  the  paper  handled. 

in.  Distinguish  between  what  is  known  as  singk-Taaat   and  as 
<&#£&-name  paper. 

H2.  Account  in  some  measure  for  the  constantly  recurring  seasons 
of  financial  depression. 

113.  Describe  fully  the  plan  and  purpose  of  a  letter  of  credit. 
Name  a  few  of  the  leading  American  banking  houses  which  issue  such 
letters. 

114.  Enumerate  the  leading  items  of  resource  and  liability  in  a 

national  bank  statement. 

115.  A  bank  receives  from  the  comptroller  of  the  treasury  $100,- 
ooo  in  new  bank  notes  of  its  own  issue.     What  ledger  entry? 

116.  A  bank  retires  $10,000  of  its  own  bank  notes.     What  entry? 

"7.  Discuss  fully  the  points  which  should  enter  into  a  proper  es- 
timate of  the  value  of  paper  offered  for  discount. 

118.  To  whom  does  the  surplus  fund  of  a  savings  bank  belong? 

119.  Name  two  leading  mercantile  agencies.     In  what  way  do  they 
serve  business  houses?     Tell  something  of  their  methods. 

120.  Describe  the  form  and  use  of  a  certificate  of  deport.     How 
does  it  differ  from  a  bank  draft? 


Stocks,  Bonds,  and  other  Securities. 


The   Stock   Exchange. 

The  general  public  too  often  regard  the  stock  exchange  merely  as  a 
noisy  congregation  of  brokers  who  gamble  in  the  securities  of  govern- 
ments and  corporations,  under  the  guise  of  legitimate  business.  A 
deeper  insight,  however,  into  the  character  and  functions  of  these  in- 
stitutions will  admit  the  important  part  which  they  play  in  the  financial 
mechanism  of  the  country.  The  exchanges  of  the  world  are  instru- 
ments of  enormous  economic  value  in  subdividing  and  distributing 
capital  and  in  directing  its  employment  in  great  commercial  and  indus- 
trial enterprises.  When  the  Wall  street  man  goes  down  to  his  office  his 
first  inquiry  is  for  the  two-o'clock  prices  on  the  stock  exchange  of  Lon- 
don, which  are  received  before  ten  o'clock  in  New  York.  The  quota- 
tions of  American  stocks,  with  the  accompanying  price  of  consols  and 
the  Bank  of  England  rate,  give  him  the  financial  condition  abroad 
translated  into  figures  by  the  keenest  financiers.  New  York  has  no 
more  entertaining  public  exhibition  than  its  Stock  Exchange.  The 
visitor  who,  for  the  first  time,  looks  down  from  a  gallery  upon  its  mem- 
bers in  the  act  of  transacting  business,  is  astonished  at  the  turmoil  and 
confusion  he  witnesses.  There  is  no  reason  why  bonds  and  shares 
should  not  be  publicly  dealt  in,  and  in  large  quantities,  as  well  as  dry 
goods,  corn,  or  cotton.  But,  unfortunately,  few  stock  exchanges  con- 
fine their  transactions  to  ordinary  legitimate  business.  The  members 
are  divided  into  two  classes — those  who  execute  commissions  for  others, 
and  those  who  deal  on  their  own  account.  Among  the  latter  are  the 


IO2  STOCKS,    BONDS, 


boldest  and  sharpest  speculators  of  the  day.  You  will  look  in  vain  in 
the  quotations  for  the  stock  of  dozens  of  corporations  whose  securities 
are  among  the  choicest  investments.  It  is  upon  fluctuations  that  stock 
speculation  grows  strong,  and  the  largest  profits  are  often  made  on  the 
poorest  stocks.  In  London,  Paris,  Berlin,  Vienna,  and  New  York  there 
are  very  large  private  banking  institutions  which  buy  and  sell  bonds 
and  stocks  on  the  stock  exchanges  of  the  world  on  commission.  These 
great  financial  institutions  negotiate  loans  for  governments  and  great 
corporations  and  are  the  intermediaries  in  all  the  great  movements  of 
capital  from  one  country  to  another.  The  London  Stock  Exchange  has 
scarcely  more  than  one  hundred  years  of  history.  In  the  early  part  of 
the  century  the  elder  Rothschild  was  one  of  the  giants  "  on  'change," 
and  it  was  in  this  business  that  he  amassed  the  great  fortune  which 
makes  the  name  of  his  house  synonymous  with  money  power.  The 
London  Stock  Exchange  occupies  an  old  dingy  building  on  Capel 
Court  close  to  the  Bank  of  England.  The  membership  is  not  limited 
to  a  fixed  number  as  in  Paris  and  New  York.  One  of  the  marked  pe- 
culiarities of  the  Stock  Exchange  of  London  is  the  distinction  between 
those  who  act  as  agents  for  the  public,  and  who  are  technically  called 
brokers,  and  those  who  do  business  on  their  own  account  and  are  de- 
scribed as  dealers  or  jobbers.  In  the  Paris  Bourse  all  agents  are 
strictly  forbidden  to  trade  on  their  own  account.  The  New  York  mem- 
bers who  operate  on  their  own  account  are  called  room-traders  or 
scalpers,  whose  profits  or  losses  consist  in  quick  turns  made  during  the 
day.  They  endeavor  to  detect  immediate  monetary  influences  without 
considering  the  ultimate  tendency  of  prices.  Nominally  the  stock  ex- 
changes guard  public  interest  in  declining  to  admit  to  their  regular  quo- 
tations the  stocks  of  questionable  enterprises.  Before  any  shares,  bonds, 
or  debentures  can  be  quoted  in  the  official  lists,  application  must  be 
made  in  behalf  of  such  issues  and  their  bona  fide  character  must  be  es- 
tablished. The  membership  of  the  New  York  Stock  Exchange  is  lim- 
ited to  about  1,100  and  seats  becoming  vacant  by  retiring  members 
bring  prices  all  the  way  from  $20,000  to  $50,000  each.  Stocks  and 
bonds  sold  in  the  regular  way  are  deliverable  to  the  buyer  during  ex- 
change hours  on  the  following  day.  Transactions  are  quickly  collected 
and  rapidly  reported  to  the  outside  world.  In  hundreds  of  offices  in 
New  York  City  and  in  other  American  cities  can  be  seen  a  little  instru- 
ment called  a  ticker  which  automatically  prints  abbreviated  names  of 
stocks,  with  their  prices,  on  a  narrow  ribbon  of  paper.  These  tickers 
are  rented  to  these  offices,  as  are  telephones  by  New  York  telegraph 


AND   OTHER   SECURITIES. 


companies,  and  as  fast  as  the  sales  are  made  the  quotations  are  ticked 
off  in  thousands  of  offices  in  all  parts  of  the  United  States.  There  are 
many  exchange  institutions  in  the  country.  Nearly  every  large  city  has 
its  stock  exchange,  and  scattered  in  trade  centers  are  cotton  exchanges, 
produce  exchanges,  petrolium  exchanges,  mining  exchanges,  etc. 

Technical    Terms    of   Stock    Exchanges. 

The  term  bull  is  applied  to  those  who  are  purchasers  of  stock  for 
long  account,  with  the  purpose  of  advancing  prices  as  the  tendency  of 
a  bull  is  to  elevate  everything  within  his  reach.  The  term  bear  is  ap- 
plied to  those  who  sell  stock  short,  with  the  purpose  of  depreciating 
values.  The  bear  operates  for  a  decline  in  prices.  To  buy  one  stock 
and  sell  another  with  the  expectation  that  the  one  bought  will  advance 
and  the  one  sold  will  decline,  is  a  hedge.  The  broker's  charge  for  his 
services  is  called  a  commission,  which  in  the  New  York  Stock  Exchange 
is  one-eighth  of  one  per  cent,  each  way  on  the  par  value  of  the  security 
purchased  or  sold.  A  point  means  one  per  cent,  on  the  par  value  of  a 
stock  or  bond.  Stock  privileges  or  puts  and  calls  are  extensively  dealt 
in  abroad  and  to  some  extent  here.  A  put  is  an  agreement  in  the  form 
of  a  written  or  printed  contract  filled  out  to  suit  the  case,  whereby  the 
signer  of  it  agrees  to  accept  upon  one  day's  notice,  except  on  the  day 
of  expiration,  a  certain  number  of  shares  of  a  given  stock  at  a  stipu- 
lated price.  A  call  is  the  reverse  of  a/&/,  giving  its  owner  the  right 
to  demand  the  stock  under  the  same  conditions.  A  ////  may  serve  as 
an  insurance  to  an  investor  against  a  radical  decline  in  the  value  of 
stocks  he  owns  ;  a  call  may  be  purchased  by  a  man  whose  property  is 
not  immediately  available,  but  who  may  desire  to  be  placed  in  a  posi- 
tion to  procure  the  shares  at  the  call  price,  if  they  are  not  below  that 
in  the  open  market  when  he  secures  the  necessary  funds.  The  specu- 
lator usually  trades  on  margins.  If  he  has  $500  to  invest  he  buys  $5,- 
ooo  worth  of  stock,  his  $500  being  ten  per  cent,  of  the  total  amount. 
He  expects  to  sell  again  before  the  remaining  amount  falls  due.  The 
margin  is  usually  placed  by  the  speculator  in  the  hands  of  a  broker  as 
a  guaranty  against  loss.  Although  these  brokers  are  really  agents  for 
others,  yet  on  'change  they  stand  in  the  mutual  relationship  of  princi- 
pals. A  margin  is  merely  a  partial  payment,  but  a  broker  buying  stock 
for  a  client  on  margin  is  compelled  to  wholly  pay  for  it.  If  he  has  not 
the  necessary  capital  his  usual  custom  is  to  borrow  from  banks  or 
money-lenders,  pledging  the  stock  as  collateral  security.  In  foreign 
exchanges  the  element  of  credit  enters  more  largely  into  the  conduct  of 


104  STOCKS,    BONDS, 


business.  Where  the  credit  of  the  client  in  London  is  established,  his 
broker  does  not,  ordinarily,  call  on  him  for  any  cash  until  the  next 
"  settlement  day."  There  are  a  variety  of  methods  of  securing  what  is 
called  a  corner,  that  is,  a  controlling  interest  in  marketable  stocks 
which  others  are  compelled,  owing  to  previously  made  contracts,  to 
buy.  A  syndicate  is  a  party  of  capitalists  who  unite  their  resources  to 
accomplish  some  financial  object,  such  as  the  purchase  of  a  property,  a 
public  loan,  an  issue  of  bonds  or  stocks,  or  any  other  undertaking  re- 
quiring large  capital.  A  pool  is  in  some  respects  similar  to  a  syndicate. 
The  funds  of  individuals  are  put  into  a  common  undertaking  with  a 
view  of  manipulating  particular  securities  and  dividing  the  profits.  It 
flavors  of  speculation  if  not  of  gambling.  A  boom  is  an  expansion  of 
credit  and  a  large  inflation  of  value.  A  panic  is  an  unusual  fright 
among  speculators  which  reduces  prices  and  causes  a  general  collapse 
of  credit.  A  small  boom  is  called  a  flurry.  The  rules  of  the  ex- 
changes of  New  York  forbid  trading  after  closing  hours,  but  in  times 
of  great  financial  excitement  business  overflows  into  the  streets  and  ho- 
tels and  is  called  trading  on  the  curb.  A  wash  sale  is  a  fictitious  trans- 
action made  by  two  members  acting  in  collusion,  for  the  purpose  of 
swelling  the  volume  of  apparent  business  in  a  security,  and  thus  giving 
a  false  impression  of  its  value.  Stocks  sell  dividend- on  between  the 
time  the  dividend  is  declared  and  the  day  the  books  of  the  company 
close  for  transfer ;  after  that  they  sell  ex-dividend,  in  which  case  the  div- 
idend does  not  go  to  the  buyer.  When  a  company  decides  not  to  de- 
clare a  dividend  it  is  said  to  pass  its  dividend.  To  sell  stock  buyer  j 
is  to  give  the  buyer  the  privilege  of  taking  it  on  the  day  of  purchase, 
or  on  any  of  the  three  following  days,  without  interest ;  and  to  sell 
stock  seller  j  is  to  give  the  seller  the  privilege  of  delivering  it  on  the 
day  of  purchase,  or  on  any  one  of  the  three  following  days,  without  in- 
terest. Buyer  j  is  a  little  lower,  and  seller  3  a  little  higher  than  regu- 
lar way  when  the  market  is  in  a  normal  condition.  Bucket-shops  are 
establishments  conducted  nominally  for  the  transaction  of  a  stock-ex- 
change business,  but  really  for  the  registration  of  bets  or  wagers,  usu- 
ally for  small  amounts,  on  the  rise  or  fall  of  the  prices  of  stocks,  there 
being  no  transfer  or  delivery  of  the  commodities  nominally  dealt  in. 
There  are  thousands  of  these  counterfeit  concerns  throughout  the  country 
conducted  without  any  regard  for  legitimate  commercial  enterprises. 

Brokers. 

Brokers  are  persons  employed  as  middlemen  to  transact  business 


AND   OTHER   SECURITIES. 


or  negotiate  bargains  between  different  merchants  or  individuals.  There 
are  bill  or  exchange  brokers  who  buy  and  sell  foreign  bills ;  note  brokers 
who  deal  in  promissory  notes ;  stock  brokers  who  buy  and  sell  stocks 


for  others ;  ship  brokers  who  buy  and  sell  cargoes  in  transit  or  upon 
arrival ;  insurance  brokers  who  are  middlemen  between  the  insurance 
companies  and  the  insured  ;  custom  house  brokers  who  act  for  mer- 


106  STOCKS.    BONDS. 


chants  in  getting  consignments  through  the  custom  house;  and  brokers 
in  cattle;  in  dry  goods;  in  coffee;  in  cotton  ;  in  drugs;  in  flour;  in 
grain;  in  hides;  in  oil; 'in  real  estate;  in  sugar;  in  tobacco;  in 
wool;  in  everything  or  anything  that  is  bought  or  sold  in  large  quanti- 
ties. By  attending  to  one  class  of  business  constantly  they  acquire  a 
more  intimate  knowledge  of  its  various  details,  of  the  houses  from  which 
to  buy,  of  the  best  market  for  sales,  and  of  the  credit  of  those  engaged 
in  it,  than  could  possibly  be  expected  of  a  general  merchant.  The 
large  manufacturers  living  outside  of  the  great  centers  find  it  to  their 
advantage  to  engage  brokers  to  buy  their  raw  material  for  them,  so  we 
find  that  each  broker  has  his  regular  customers,  and  for  a  small  com- 
mission he  goes  into  the  market  and  buys  or  sells  as  carefully  as  though 
he  were  spending  his  own  money.  It  is  to  these  circumstances — to  a 
sense  of  the  advantages  to  be  derived  from  using  brokers  in  the  trans- 
action of  business — that  they  are  so  extensively  employed  in  New  York, 
Chicago,  London,  and  other  great  cities.  In  France  the  brokers  are 
called  agents  de  change,  and  their  number  in  Paris  is  limited  to  sixty. 
They  are  severally  obliged  to  give  bonds  for  the  prevention  of  abuses, 
and  are  not  allowed  to  charge  more  than  a  fixed  rate  of  commission. 

Stock    Companies. 

To  organize  a  stock  company  it  is  necessary  for  a  number  of  per- 
sons to  come  together  and  make  a  certificate  to  the  effect  that  they  pro- 
pose to  form  a  company  to  bear  a  certain  name,  for  the  purpose  of 
transacting  a  certain  kind  of  business  at  a  certain  place.  The  certifi- 
cate states  that  they  propose  to  issue  a  certain  number  of  shares  of 
stock  at  a  certain  price  per  share,  that  the  capital  stock  is  to  be  a  cer- 
tain amount,  and  that  the  company  is  to  continue  to  exist  for  a  definite 
period  of  time.  Blank  forms  for  such  certificate  are  supplied  by  the 
secretary  of  the  state  where  the  company  is  being  organized  and  when 
properly  filled  out,  signed,  and  delivered  to  him,  he  issues  a  license  or 
charter  to  the  persons  making  such  certificate,  giving  them  permission 
to  open  books,  sell  stock,  and  carry  on  the  enterprise  outlined.  State 
laws  regarding  stock  companies  differ  very  largely. 

Shares    of   Stock. 

The  usual  par  value  of  a  share  of  stock  is  $100.  That  is,  if  a 
company  organize  with  a  capital  of  $50,000,  they  will  have  500  shares 
to  sell.  Each  person  who  buys  or  subscribes  for  the  stock,  that  is,  who 
joins  the  company,  receives  a  certificate  of  stock.  See  illustrations. 


AND   OTHER   SECURITIES.  l(>7 

These  certificates  are  transferable  at  the  pleasure  of  the  owners.     The 
—  rer  is  made  by  a  form  of  endorsement  on  the  back  of  the  certifi- 

fc  *  -••   subscribing  in  this  way  become  responsible   for  the 
good  management  o,  1  .  and  ^  ^  ^  ^ 

the  laws  of  the  state  in  which  in,, 

.,,    .      .   .,     ,.     ,  -^  Dany  is  organized.     Usually  they 

are  responsible  individually  for  the  liaDiiu..   .r    . 

,-,  i         u      -i        t*ie  concern  should  be 

come  bankrupt.     Every  person  who  subscribes  own»^ 

,  .        ,.    ,         777,          AH     i        i       v.  ,,  ^rt  of  the  busi- 
ness and  is  called  a  shareholder.     All  the  shareholders 


gather,  and  out  of  their  number  they  choose  a  certain  number  o 
rectors.  The  directors  choose  a  president  and  other  necessary  officers 
and  fix  the  amount  of  salary  which  shall  be  paid  such  officers  for  their 
work.  As  a  rule  directors  have  no  salaries  attached  to  their  positions. 
A  regular  meeting  of  all  the  shareholders  is  held  at  least  once  a  year  to 
elect  the  directors  and  hear  the  reports  of  the  officers.  It  is  necessary 
to  file  a  statement  of  resources  and  liabilities  each  year  with  the  State 
Secretary. 

Capital    Stock    Increased. 

The  capital  stock  of  a  concern  may  be  increased  or  diminished  by 
a  vote  of  the  majority  of  the  stockholders  representing  a  majority  of 
the  stock. 

Preferred    Stock. 

The  preferred  stock  of  a  corporation  is  given  to  secure  some  obli- 
gation of  the  company  and  upon  it  dividends  are  declared  in  preference 
to  common  stock.  That  is  to  say,  if  a  man  holds  a  share  of  preferred 
stock  he  will  receive  interest  thereon  out  of  the  profits  of  the  business 
before  such  profits  are  given  in  the  form  of  dividends  to  shareholders 
generally. 

Dividends. 

The  directors  of  a  company  after  paying  the  expenses  and  laying 
b'y  a  certain  amount  for  contingencies,  divide  the  profits  among  the 
shareholders.  These  profits  are  called  dividends,  and  in  well  managed 
companies  the  dividends  which  are  declared  quarterly,  semi-annually, 
or  annually  usually  amount  to  good  interest  on  the  shareholder's  invest- 
ment. 

Surplus    Fund. 

It  is  not  customary  to  pay  a  larger  dividend  than  good  interest  on 
the  investment.  In  some  states  some  classes  of  corporations  are  not 


xo8 


STOCKS,    BONDS, 


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AND   OTHER  SECURITIES. 


I09 


NTHE  STATE  OF  NEWJERSET. 


JNTEREST  PAYABLE 

JUNE  I  STAND  DECEMBER  I<?T 


permitted  to  de- 
clare dividends 
larger  than  a 
fixed  amount. 
The  profits  re- 
maining after 
expenses  and 
dividends  are 
paid  are  cred- 
ited to  what  is 
called  a  surplus 
fund.  This 
fund  is  the  prop- 
erty of  the 
shareholders 
and  is  usually 
invested  in 
good  securities. 

Treasury 

Stock. 

It  often  oc- 
curs that  a  new 
company  finds 
it  necessary  to 
set  aside  a  cer- 
tain number  of 
shares  to  be 
sold  from  time 
to  time  to  se- 
cure working 
capital.  Such 
stock  is  held  in 
the  treasury  un- 
til it  is  needed 
and  is  called 
treasury  stock. 

Guaranteed 

Stock. 

When  a  stock 
is  issued,  upon 


110  STOCKS,    BONDS. 


which   a    certain   dividend    is    guaranteed   it    is  called    guaranteed 
stock. 

Watered   Stock. 

When  stock  is  issued  to  the  shareholders  without  increase  of  actual 
capital  the  stock  is  said  to  have  been  watered.  A  company  may  organ- 
ize for  say  $5,000  and  may  want  to  increase  to  $50,000  without  adding 
to  the  number  of  its  shareholders.  Each  holder  of  one  share  will  in 
this  instance  receive  nine  new  shares,  and  in  future  instead  of  receiving 
a  dividend  on  one  share  he  will  receive  a  dividend  on  ten  shares. 

Limited   Liability   Companies. 

When  the  name  Limited  is  affixed  to  a  stock  company's  name,  it 
signifies  that  each  shareholder  is  individually  liable  to  the  creditors  of 
the  company  for  only  the  amount  representing  the  value  of  the  shares  held 
by  him.  When  the  word  Limited  is  not  attached,  it  is  understood  that 
it  is  a  full  liability  company  in  which  each  shareholder  is  individually 
liable  to  the  creditors  of  the  company.  If  a  man  should  buy  five  shares 
in  a  limited  company  and  the  company  should  fail,  for  say  $20,000,  the 
creditors  could  compel  him  to  pay  only  the  amount  subscribed,  namely 
$500.  In  ordinary  companies  he  could  be  compelled  to  pay  the  entire 
indebtedness  if  the  amount  could  not  be  secured  from  the  shareholders 
generally.  Understand  clearly  that  the  name  Limited  printed  after  the 
name  of  a  company,  and  which  is  required  there  by  law,  does  not 
indicate  in  any  way  that  the  capital  or  credit  of  the  company  >si 
limited. 

Sale    of  Stock. 

Stock  is  usually  sold  on  certain  explicit  conditions,  such  a:  the 
paying  of  ten  per  cent,  down  and  the  balance  at  stated  intervals.  If 
the  conditions  which  are  agreed  to  by  the  shareholder  are  not  met  his 
stock  is  declared  forfeited,  or  he  can  be  sued  in  the  same  manner  as 
upon  any  other  contract.  Some  companies  organize  with  the  under- 
standing that  a  certain  percentage  of  the  nominal  value  of  the  shares  is 
to  be  paid  at  the  time  of  subscribing,  and  that  future  payments  are  to 
be  made  at  such  times  and  in  such  amounts  as  the  company  may  re- 
quire. Under  these  conditions  the  stockholders  are  assessed  whenever 
money  is  needed  to  pay  the  company's  expenses.  Such  assessments  are 
uniform  on  all  stockholders. 


AND    OTHER   SECURITIES. 


Ill 


112  STOCKS,    BONDS, 


Corporations. 

A  corporation  is  a  body  consisting  usually  of  several  persons,  em- 
powered by  law  to  act  as  one  individual,  and  continued  by  a  succession 
of  members.  Public  corporations  are  those  which  are  created  ex- 
clusively for  the  public  interest,  as  cities,  towns,  counties,  state  univer- 
sities, hospitals,  etc.  Private  corporations  are  created  wholly  or  in 
part  for  the  private  emolument  of  the  members,  as  railroad  companies, 
banks,  manufacturing  companies,  etc.  Corporate  bodies  whose  mem- 
bers at  discretion  fill  by  appointment  all  vacancies  occurring  in  their 
membership,  are  sometimes  called  close  corporations.  In  the  United 
States  the  power  to  be  a  corporation  is  a  franchise  which  can  only  ex- 
ist through  the  legislature.  There  are  two  distinct  methods  in  which 
corporations  may  be  called  into  being:  first,  by  a  specific  grant  of  the 
franchise  to  the  members;  and  second,  by  a  general  grant,  which  be- 
comes operative  in  favor  of  particular  persons  when  they  organize  for 
the  purpose  of  availing  themselves  of  its  provisions.  When  the  specific 
grant  is  made,  it  is  called  a  charter :  it  specifies  the  grantees,  indicates 
the  purpose  to  be  subserved  by  the  corporation,  and  the  powers  and 
privileges  it  shall  possess  to  that  end,  perhaps  imposes  special  liabilities 
and  penalties  for  abuse,  and  makes  provision  for  perpetual  succession 
of  members  by  a  transfer  of  interests,  or  by  elections  or  appointments 
to  fill  vacancies.  In  the  case  of  private  corporations  the  charter  must 
be  accepted  by  the  members,  since  corporate  powers  cannot  be  forced 
upon  them  against  their  will ;  but  the  charter  is  sufficiently  accepted 
by  their  acting  under  it.  Public  corporations,  on  the  other  hand,  may 
be  organized  at  the  legislative  discretion,  without  consulting  the 
pleasure  of  the  people  incorporated.  When  special  charters  are  not 
granted,  a  general  law  is  passed,  under  which  individuals  may  volun- 
tarily associate,  and,  by  complying  with  the  provisions  of  the  law,  take 
to  their  organization  corporate  powers.  In  some  of  the  states  private 
corporations  are  not  suffered  to  be.  created  otherwise  than  under  general 
laws,  and  in  others,  public  corporations  are  created  in  the  same  way. 
A  corporation  must  have  a  name,  by  which  it  shall  be  known  in  law 
and  in  the  transaction  of  its  business.  The  name  is  given  to  it  in  its 
charter  or  articles  of  association,  and  must  be  adhered  to,  though 
doubtless  a  corporation  might  render  itself  liable  on  engagements 
assumed  in  another  name  which  it  had  used  as  its  own,  and  it  is  pos- 
sible for  a  corporation  to  have  two  names,  as  has  sometimes  been  the 
case  with  municipal  bodies,  which  are  permitted  to  make  contracts  or 
bring  suits  in  one  name  for  one  purpose^  and  in  another  name  for  an- 


AND  OTHER  SECURITIES. 


1  14  STOCKS,    BONDS, 


other.  In  municipal  corporations  in  the  United  States  the  members  are 
the  citizens  ;  the  number  is  indefinite ;  one  ceases  to  be  a  member  when 
he  moves  from  the  town  or  city,  while  every  new  resident  becomes  a 
member  when  by  law  he  becomes  entitled  to  the  privileges  of  local 
citizenship.  In  corporations  created  for  the  emolument  of  their  mem- 
bers, interests  are  represented  by  shares,  which  may  be  transferred  by 
their  owners,  and  the  assignee  becomes  entitled  to  the  rights  of  mem- 
bership when  the  transfer  is  recorded  ;  and  if  the  owner  dies,  his  per- 
sonal representative  becomes  a  member  for  the  time  being.  In  such 
corporations  also,  shares  may  be  sold  in  satisfaction  of  debts  against 
their  owners.  The  necessity  for  the  use  of  the  corporate  name  in  the 
transaction  of  business,  flows  from  the  fact  that,  in  corporate  affairs,  the 
law  knows  the  corporation  as  an  individual,  and  takes  no  notice  of  the 
constituent  members.  It  was  formerly  supposed  that  a  corporation 
could  transact  no  business  except  under  its  corporate  seal ;  but  now  it 
is  only  in  the  execution  of  solemn  instruments,  such  as  deeds,  bonds, 
mortgages,  etc.,  that  the  seal  is  commonly  used.  Most  of  the  business 
of  a  corporation  is  necessarily  carried  on  with  as  little  formality  as  if 
transacted  by  an  individual.  The  laws  which  corporations  may  make 
for  their  own  government  are  made  under  the  several  heads  of  by-laws, 
ordinances,  rules  and  regulations;  and  they  are  made  by  the  governing 
body  for  any  object  not  foreign  to  the  corporate  purposes.  A  munici- 
pal corporation,  for  example,  makes  ordinances  for  the  cleaning  and 
lighting  of  its  streets,  for  the  government  of  its  police  force,  for  the 
beautifying  and  regulation  of  its  parks,  for  the  supply  of  water  to  its 
citizens,  and  for  the  punishment  of  all  breeches  of  its  regulations.  A 
railway  corporation  establishes  regulations  for  signals,  for  the  running 
of  trains,  for  freight  connections,  for  the  conduct  of  its  passengers,  and 
for  hundreds  of  other  things.  But  such  by-laws  and  regulations  must 
be  in  harmony  with  the  charter  of  the  corporation  and  with  the  general 
law  of  the  land.  For  instance,  a  municipal  corporation  could  not  en- 
force a  by-law  forbidding  the  use  of  its  streets  by  others  than  its  own 
citizens,  because  by  general  law  all  highways  are  open  to  the  common 
use  of  all  the  people.  Again,  a  railway  corporation  could  not  make  a 
rule  that  it  would  carry  goods  for  one  class  of  persons  only,  because,  as 
a  common  carrier  the  law  requires  that  it  carry  impartially  for  all.  A 
railway  company  may  properly  and  justly  require  every  passenger  to 
remain  upon  the  car  until  it  is  brought  to  a  stand,  because  prudence 
and  safety  require  this;  but  a  regulation  that  no  one  shall  leave  his  seat 
after  taking  it  until  he  leaves  it  to  pass  from  the  car  would  have  no  such 


AND    OTHER    SECURITIES. 


IJ5 


STOCKS,    BONDS, 


AND   OTHER   SECURITIES.  117 

considerations  to  support  it.  As  a  general  rule  private  corporations 
organized  under  the  laws  of  one  state  are  permitted  to  do  business  in 
other  states.  It  is  sometimes  to  the  interest  of  a  stock  company  to 
organize  under  the  laws  of  one  state  for  the  purpose  of  doing  business 
in  another.  For  instance  there  are  many  companies  chartered  under 
the  laws  of  Maine  and  with  headquarters  in  Boston.  The  Massachu- 
setts laws  require  that  a  large  portion  of  the  capital  be  paid  up  when 
the  company  is  organized,  while  a  company  with  twenty-five  dollars 
can  organize  in  Maine  for  $100,000  and  not  a  single  member  be  a 
resident  of  the  state.  So  it  is  that  many  large  companies  doing  busi- 
ness in  New  York  and  Philadelphia  are  organized  under  the  laws  of 
New  Jersey.  A  corporation  ceases  to  exist  when  it  was  limited  by  its 
charter  to  a  certain  period  of  time,  and  that  period  has  elapsed.  A 
corporation  may  be  terminated  by  a  repeal  of  its  charter  when  a  right 
to  repeal  was  reserved.  A  corporation  may  make  an  assignment  just  as 
may  an  individual.  If  all  the  members  die  the  property  interests  pass 
to  the  rightful  heirs  and  under  ordinary  conditions  the  corporation  still 
exists.  It  is  usual  to  provide  for  the  winding  up  of  corporations  which 
are  found  to  be  insolvent.  Persons  wishing  to  form  a  corporation  or 
stock  company  should  study  carefully  the  State  laws  under  which  they 
intend  to  organize. 

Bonds. 

If  a  railroad  or  a  steamship  company  or  a  city  or  any  other  cor- 
poration desire  to  borrow  money,  instruments  of  credit  called  bonds  are 
issued.  Bonds  bear  almost  the  same  relation  to  the  resources  of  a  cor- 
poration that  mortgages  do  to  real  estate.  A  bond  means  something 
that  binds.  Bonds  are  usually  issued  for  a  period  of  years  and  have 
coupons  attached  which  are  to  be  cut  off  and  presented  for  payment  of 
interest  at  regular  intervals.  The  portion  of  the  earnings  of  a  corpora- 
tion is  usually  set  aside  each  year  as  a  sinking  fund  to  meet  the  bonds 
when  they  mature.  Thus  you  see  that  a  bondholder  runs  less  risk  than 
a  stockholder,  for  the  corporation  is  bound  to  pay  interest  on  its  bonds, 
but  is  not  obliged  to  pay  dividends  on  its  stock.  On  the  other  hand, 
if  the  concern  is  very  successful,  the  shareholders  may  receive  more 
money  than  the  bondholders ;  for  no  matter  how  large  the  profits  are, 
only  the  promised  rate  of  interest  is  paid  on  the  bonds,  whereas  the 
dividends  paid  will  grow  larger  as  the  earnings  increase.  A  bond  is 
evidence  of  debt,  specifying  the  interest,  and  stating  when  the  princi- 
pal shall  be  paid ;  a  certificate  of  stock  is  evidence  that  the  owner  is  a 


STOCKS,    BONDS, 


part-owner  in  the  company,  not  a  creditor  of  the  company,  and  having 
no  right  to  regain  his  money  except  by  the  sale  of  the  stock,  or  the 
winding  up  of  the  company's  business.  The  name  debentures  is  given 
to  a  form  of  municipal  bond  in  general  use.  Nearly  all  the  large  sums 
of  money  used  by  states  and  cities  for  the  building  of  government  in- 
stitutions, bridges,  canals,  etc.,  are  raised  through  the  issue  of  bonds 
which  are  sold,  usually  at  a  price  a  little  below  par,  to  large  financial 
institutions,  banks,  and  insurance  companies.  Generally  speaking  such 
bonds  are  considered  good  securities  and  are  marketable  anywhere. 

Corporation    Franchise. 

A  franchise  is  a  right  granted  by  the  state  to  individuals  or  to 
corporations.  The  franchise  of  a  railroad  company  is  the  right  to 
operate  its  road.  Such  franchise  has  a  value  entirely  distinct  from  the 
value  of  the  plant  or  the  ordinary  property  of  the  corporation.  When 
a  corporation  sells  its  property,  the  buyer  should  expressly  bargain  for 
the  franchise.  Frequently  a  corporation  is  not  allowed  to  sell  its  fran- 
chise except  by  consent  of  the  state. 

Liability    of  Stockholders. 

The  stockholders  of  a  corporation  are  usually  not  liable  for  its 
debts  beyond  the  amount  of  the  stock  held  by  them.  The  members  of 
a  joint-stock  company  are  liable  as  partners.  The  holders  of  national 
bank  stocks,  in  case  of  the  failure  of  the  bank,  are  liable  to  double  the 
amount  of  the  face  value  of  their  stock;  that  is,  each  stockholder,  in 
addition  to  the  loss  of  his  stock,  may  be  assessed  to  pay  all  the  debts 
of  the  bank,  up  to  an  amount  equal  to  his  stock.  There  is  no  personal 
liability  as  in  the  case  of  partnerships  or  joint-stock  companies.  An 
instance  is  given  of  a  gentlemen  in  Boston  who  had  $30,000  invested 
in  the  stock  of  a  national  bank  of  that  city.  The  bank  failed.  He 
lost  his  entire  $30,000  and  was  compelled  to  pay  an  additional  $30,- 
ooo.  That  is,  the  failure  reduced  his  property  $60,000. 

Arbitrage. 

This  name  is  given  to  stocks  and  shares  bought  in  one  market  and 
sold  in  another ;  as  shares  bought  on  the  London  market  and  sold  in 
New  York.  This  class  of  business  is  in  the  hands  of  brokers  and  is 
carried  on  by  telegraph. 

Advantages    over    Partnerships. 

The  following  are  given  as  a  few  of  the  advantages  which  are 
claimed  for  corporations  and  joint-stock  companies  over  partnerships; 


AND  OTHER  SECURITIES.  119 


i.  Union  of  capital  without  the  active  service  of  the  investors.  2. 
Better  facilities  for  borrowing.  It  is  a  common  thing  for  a  partnership 
to  be  changed  to  a  corporation  for  the  express  purpose  of  raising  money 
by  the  issue  of  bonds  or  stock.  3.  Limited  agency  of  directors.  A 
partner  may  pledge  and  sell  the  partnership  property,  may  buy  goods 
on  account  of  the  partnership,  may  borrow  money  and  contract  debts 
in  the  name  and  on  the  account  of  the  partnership.  These  powers  can- 
not be  limited  by  agreement  between  the  partners  so  as  to  bind  outsid- 
ers. Accordingly,  a  person  dealing  with  a  partner  is  entitled,  unless  he 
has  express  notice  to  the  contrary,  to  assume  that  the  partnership  has 
the  usual  powers.  The  directors  of  a  company  are  in  a  very  different 
position.  They  are  special  agents,  and  have  only  such  powers  as  are 
given  to  them  by  regulations  of  the  company.  The  power  of  thus  ef- 
fectually limiting  the  authority  of  the  acting  partners  is  of  great  value, 
and  constitutes  one  of  the  chief  advantages  which  a  company  has  over 
a  partnership.  4.  The  continuous  existence  of  a  company.  Where  a 
man  is  possessed  of  a  profitable  business  he  very  commonly  wishes  to 
provide  for  its  continuance  in  the  event  of  his  death.  If  he  proposes 
to  bequeath  the  concern  to  his  son  or  some  other  relative  absolutely, 
there  is  no  difficulty ;  but  it  may  be  that  his  sons  are  under  age  or  are 
not  anxious  to  engage  in  the  business ;  in  such  cases  the  ordinary 
course,  if  the  concern  is  not  converted  into  a  company,  is  to  bequeath 
the  business,  with  the  capital  employed  in  it,  to  trustees  who  are  di- 
rected to  carry  it  on  so  as  to  effect  the  testator's  wishes.  But  in  these 
work-a-day  times  it  is  very  difficult  to  find  trustees  willing  to  undertake 
such  trusts.  If,  however,  the  business  has  been  changed  to  a  private 
company  these  difficulties  disappear.  All  the  shares  in  the  company 
with  the  exception  of  a  very  few,  are  issued  to  the  former  owner  as 
fully  paid  up  and  he  becomes  managing  director.  By  his  will  the 
shares  are  bequeathed  to  trustees,  who  become  or  appoint  directors. 
Upon  the  death  of  the  testator  the  business  will  go  on,  and  in  due 
course  the  shares  may  be  sold,  distributed,  or  otherwise  disposed  of  as 
his  will  directs.  5.  In  the  case  of  a  partnership  the  title  of  the  prop- 
erty held  may  be  affected  by  the  death  or  bankruptcy  of  one  of  the 
partners,  but  in  the  case  of  a  company  the  property  is  vested  in  the 
company  as  a  body  corporate,  and  no  changes  among  its  members  af- 
fects the  title.  6.  Contracts  with  a  partnership  are  in  law  regarded  as 
contracts  with  the  members  of  it,  whereas  contracts  with  a  company 
are  not  contracts  with  individual  shareholders.  7.  New  shareholders 
are  admitted  much  more  easily  than  are  new  partners.  8.  A  retiring 


120 


STOCKS,    BONDS, 


partner  is  still  liable  for  existing  debts ;  a  shareholder  can  retire  abso- 
lutely by  selling  his  stock  and  having  it  legally  transferred. 


Illustrating    why    Companies    are    1'ormed. 

It  may  be  helpful  to  the  student  to  give  some  instances  of  the  many 


AND  OTHER  SECURITIES.  121 

causes  which  lead  to  the  formation  of  stock  companies  and  corpora- 
tions : 

1.  A  firm  consists  of  several  members,  each  of  whom  has  put  to- 
gether some  private  means  which  he  is  desirous  of  freeing  from  the  risk 
of  trade.     To  effect  this  they  convert  the  business  into  a  stock  com- 
pany ;  they  become  the  sole  directors  of  the  company ;  and  they  re- 
ceive paid-up  shares  in  substitution  for  their  interests  in  the  business. 
Henceforth  their  assets  outside  the  business  are  under  certain  conditions 
free  from  risk. 

2.  A  firm  consists  of  several  members,  one  of  whom  is  entitled  to 
the  greater  part  of  the  capital,  and  has  also  large  private  means.     He 
is  disposed  to  retire  on  the  fortune  he  has  accumulated.     If  his  liability 
could  be  limited,  he  would  be  willing  to  leave  part  of  his  capital  in  the 
business,  and  to  assume  the  position  of  a  sleeping  partner.     The  only 
way  in  which  this  can  be  effected  is  by  converting  the  business  into  a 
limited  liability  company. 

3.  The  owner  of  a  profitable  business  dies.     There  are  competent 
managers,  but  the  owner's  sons  are  not  inclined  to  devote  themselves  to 
the  concern,  or  to  incur  the  uplimited  liability  involved  in  carrying  it 
on  through  managers.     Accordingly,  they  convert  the  business  into  a 
private  company. 

4.  A  capitalist  is  willing  to  supply  a  person  or  a  firm  engaged  in 
trade  with  additional  capital  in  consideration  of  a  share  in  the  profits, 
but  does  not  wish  to  incur  the  liabilities  of  partnership.     He  therefore 
stipulates  that  the  business  shall  be  converted  into  a  limited  company. 
He  then  brings  in  the  additional  capital  by  paying  cash  for  the  shares 
of  the  company. 

5.  A,  B,  and  C  are  entitled  to  a  valuable  business.     By  reasons  of 
a  temporary  lock-up  of  funds  or  otherwise  they  find  it  necessary  to  con- 
sult their  principal  creditors.     Bankruptcy,  with  its  grasping  officialism 
and  discredit,  would  be  disastrous  to  all  concerned,  and  more  especially 
to  the  creditors.     Accordingly,  the  concern  is  converted  into  a  company, 
the  smaller  creditors  are  paid  off  in  full,  and  the  principal  creditors  all 
take  debentures  for  their  debts,  and  are  given  paramount  control  in  the 
management  of  the  company.     The  concern  is  thus  placed  on  its  legs, 
and  as  soon   as  practicable  the  debentures  are  cleared  off,  and  mean- 
time the  creditors  have  the  fullest  security  that  it  is  possible  to  give 
them,  and  are  able  in  fact  to  manage  their  own  affairs  and  protect  their 
pwn  interests. 

6.  A,  B,  and  C  desire  to  start  a  newspaper,  or  to  supply  a  town 
9 


122  STOCKS,   BONDS, 


with  water,  or  to  bu'ld  a  theatre,  or  to  provide  swimming  baths,  or  to 
erect  a  hotel.  They  consider  it  necessary  to  unite  their  capital.  Ac- 
cordingly they  form  a  private  company  and  each  becomes  a  director, 
and  further  funds,  if  Wanted,  are  raised  by  the  issue  of  additional 
stock  or  first  mortgage  bonds. 

7.  A  has  a  patent  for  an  invention,  but  no  capital.  The  utility  of 
the  invention  is  fairly  obvious,  but  it  requires  to  be  more  thoroughly 
tested,  and  a  large  expense  must  be  incurred  in  putting  it  on  the 
market.  B,  C,  and  D  agree  to  put  up  the  necessary  capital  for  a  share 
in  the  profits  and  to  carry  out  their  plans  properly  they  find  it  necessary 
to  form  a  stock  company. 

The  foregoing  are  simple  illustrations.  There  are  thousands  of 
reasons  why  companies  and  corporations  are  formed.  In  four  cases 
out  of  five  the  major  reason  is  the  need  of  the  larger  working  capital 
which  can  be  more  easily  secured  by  the  formation  of  a  chartered 
concern. 

Investing. 

With  the  growth  of  wealth,  we  find  increasing  numbers  of  persons 
who  want  to  invest  their  means  in  good  securities.  To  do  this  success- 
fully and  safely  is  a  very  difficult  question.  It  is  even  more  difficult  to 
keep  money  profitably  employed  than  to  make  it.  Changes  and  in- 
novations are  of  continual  occurrence.  Not  only  are  new  securities 
constantly  coming  upon  the  market,  but  new  subjects  as  a  basis  of  their 
production  are  industrious!}  sought  after.  Every  newly-discovered 
force  or  process  in  mechanics  means  the  appearance  of  another  de- 
tachment of  paper  securities.  The  war  of  the  rebellion  popularized  the 
coupon  bond,  in  consequence  of  its  adoption  by  the  government,  and 
made  it  the  favorite  form  of  investment  paper.  Railroads  and  other 
corporations  soon  availed  themselves  of  the  confidence  which  that 
species  of  paper  inspired,  and  states,  cities,  and  counties  were  soon 
flooding  the  country  with  obligations  carrying  long  coupon  attach- 
ments. Many  persons  have  purchased  and  paid  good  prices  for  mortgage 
coupon  bonds,  giving  them  no  control  over  their  security,  who  would 
have  rejected  share-certificates  standing  for  an  equal  interest  in  the 
property  pledged,  and  giving  them  the  right  to  participate  in  its  manage- 
ment, with  the  possibility  of  a  greater  return  for  their  money.  Many 
of  the  states  through  careless  legislation  have  permitted  corporations  to 
decide  for  themselves  the  anuunts  of  obligations  they  might  put  out, 
and  the  privilege  has  been  very  much  abused.  We  now  have  stocks  and 


AND  OTHER  SECURITIES.  123 

bonds  upon  the  market  representing  nearly  all  conceivable  kinds  of 
property — telegraph  and  telephone  companies,  mining  companies, 
cattle  ranches,  grain  farms,  water-works,  canals,  bridges,  oil  and  gas 
wells,  electric  lighting,  trolley  companies,  factories  and  mills,  patent 
rights,  steamboat  lines,  apartment  houses,  etc.  Not  only  are  properties 
of  many  kinds  used  to  issue  bonds  upon,  but  many  kinds  of  bonds  are 
often  issued  upon  the  same  properties.  Thus  we  find  among  our  rail- 
roads not  only  first,  second,  and  third  mortgages,  but  income  bonds, 
convertible  bonds,  consolidated  bonds,  redemption  bonds,  renewal 
bonds,  terminal  bonds,  divisional  bonds,  sinking-fund  bonds,  collateral 
trust  bonds,  equipment  bonds,  etc.,  until  they  lap  and  overlap  in  seem- 
ingly endless  confusion.  One  issue  of  bonds  is  sometimes  made  the 
basis  of  other  issues.  Some  one  has  said  that  there  never  was  a  time 
ii:  tne  history  of  the  world  when  it  was  so  easy  to  invest  money — and 
to  lose  it.  Of  the  securities  that  are  offered  with  first-class  recommen- 
dations, it  is  probable  that  about  one-third  are  actually  good,  one-third 
have  some  value,  and  one-third  are  practically  worthless.  In  making 
investments,  the  first  and  main  thing  to  be  studied  is  safety.  Never 
buy  a  security  of  any  kind  without  having  read  it.  Do  not  buy  what 
are  commonly  known  as  cheap  securities.  Do  not  rely  solely  upon  the 
advice  of  a  broker.  He  may  have  personal  interest  to  serve.  By  far 
the  greater  number  of  losses  to  investors  has  been  in  securities  purchased 
exclusively  on  the  recommendation  of  interested  commission  men.  It 
is  a  mistake  to  give  preference  to  listed  securities — that  is,  those  re- 
ported on  the  stock  exchange  lists.  Stocks  are  too  often  listed  simply 
for  speculative  purposes,  and  the  price  represents  not  so  much  the 
value  of  the  property  as  the  pitch  of  the  speculation  at  the  time.  Se- 
curities, in  the  long  run,  must  stand  upon  their  merits.  As  a  rule,  the 
best  time  for  an  experienced  investor  to  buy,  is  when  others  are  un- 
loading. 

U.  S.  Government   Bonds. 

At  different  times  the  United  States  government  has  issued  bonds 
to  relieve  the  treasury.  No  better  investments  are  offered.  They  draw 
interest  at  rates  from  3  to  4  per  cent.,  and  late  issues  have  been  sold  at 
prices  slightly  above  par.  These  bonds  are  absolutely  safe  and  are  al- 
ways marketable.  It  is  estimated  that  the  civilized  nations  of  the 
globe  r.ow  owe,  without  including  local  obligations,  not  less  than  thirty 
billions  of  dollars,  a  sum  equal  to  a  mortage  of  $800  OD  each  square 
mile  of  their  territory. 


184  STOCKS,   BONDS, 


State    Bonds. 

History  has  shown  that  state  bonds — bonds  issued  by  the  states  for 
local   enterprises  and  improvements,  such  as  government  buildings, 


schools,  hospitals,  etc. — have  not  always  proven  profitable  as  invest- 
ments.    As  a  rule,  however,  the  bonds  of  such  states  as  Massachusetts, 


AND  OTHER  SECURITIES.  125 

New  York,  Pennsylvania,  etc.,  rank  next  to  those  of  the  Federal  gov- 
ernment as  safe  securities. 


Municipal    Bonds. 

These  are  issued  by  cities  and  other  municipalities  to  raise  money 
for  local  improvements,  such  as  city  buildings,  street  paving,  water- 
works, etc.  They  have  an  important  element  of  security  that  state 
bonds  do  not  possess.  Their  collection  can  be  legally  enforced,  but 
in  buying  them,  it  is  very  important  that  all  points  affecting  their 
validity  should  be  carefully  inquired  into.  If  proper  precautions  are 
taken  by  buyers,  municipal  securities  may  be  considered  among  our 
safest  and  most  remunerative  investments. 

Railroad    Mortgages. 

As  our  railways,  with  few  exceptions,  are  valuable  and  productive 
properties,  they  furnish  an  excellent  security  for  interest-bearing  paper, 
provided  always  that  they  are  properly  managed  and  not  overburdened 
with  debt.  Railroads  are  now  built  for  the  purpose  of  profit.  Rail- 
roading is  an  industry  just  as  is  the  raising  of  cattle,  the  growing  of 
grain,  or  the  manufacture  of  machinery.  When  a  new  railway  enter- 
prise is  undertaken,  its  promoters  expect  to  make  the  road  not  only 
supply  funds  for  its  own  construction,  but  to  give  them  working  capital  in 
addition.  This  is  accomplished  by  mortgaging  the  property  to  that  ex- 
tent that  the  bonds  can  be  sold  for  a  larger  sum  than  the  actual  cost  of 
the  road.  Default  in  the  payment  of  interest  throws  the  road  into  the 
hands  of  a  receiver.  The  securities  immediately  fall  in  value.  They 
are  perhaps  bought  up  by  a  syndicate  of  crafty  speculators  who  are 
permitted  to  reorganize  the  road  and  its  management.  This  is  the  his- 
tory of  many  of  our  roads.  There  are  exceptional  cases,  of  course, 
but  the  investor  should  be  familiar  with  the  facts  before  buying  railroad 
mortgages. 

Railroad    Stocks. 

These  are  of  such  varied  character  that  it  is  impossible  here  to 
make  more  than  general  statements.  Many  of  our  railroad  stocks  bring 
prices  far  above  par  and  pay  liberal  interest  on  investments.  Some  of 
them  are  so  profitable  that  they  are  really  not  on  the  market  and  cannot 
easily  be  bought.  Others  represent  roads  loaded  down  with  mortgages 
and  other  obligations  so  heav)  AS  to  make  the  stock  really  a  liability 


126  STOCKS,   BONDS, 


rather  than  a  resource  to  its  owner.     The  stock  quotations  represent  in 
a  general  way  the  comparative  value  of  these  securities. 

Miscellaneous    Stocks. 

To  make  a  profitable  investment  in  stocks  the  buyer  must  antici- 
pate the  future.  A  mill  that  may  be  working  day  and  night  this  year 
may  be  obliged  to  shut  down  entirely  next  year.  A  business  which  is 
open  to  public  competition  must  take  its  chances  on  its  future  success. 
The  greater  the  earnings  the  more  certain  the  competition.  Many  cor- 
porations owning  monopolies  by  virtue  of  patent  rights  have  made  large 
fortunes,  but  there  is  always  the  possibility  of  new  discovery.  Ele^ 
tricity  has  succeeded  gas ;  the  telephone  is  competing  with  the  tele- 
graph ;  the  trolley  is  cutting  into  the  profits  of  railways.  A  good  thing 
in  stocks  to-day  does  not  necessarily  mean  a  good  thing  next  year. 

Farm    Mortgages. 

Mortgages  upon  improved  property,  if  properly  graduated  in 
amount,  should  be  safe  and  profitable  investments.  The  buyer,  how- 
ever, must  exercise  great  care  and  good  judgment.  Should  there  be 
collusion  between  the  loaning  agent  and  the  land  owner,  the  money 
advanced  may  be  largely  in  excess  of  the  actual  property  value.  Vil- 
lages with  less  than  a  dozen  houses  are  often  the  sites  of  investment 
companies  doing  business  under  pretentious  names,  and  offering  mort- 
gage investments  at  interest  rates  which  by  the  local  conditions  are  im- 
possible. One  of  the  devices  of  these  enterprising  companies  is  to 
>offer  their  own  guarantees  as  to  both  principal  and  interest  of  all  mort- 
, gages  negotiated  by  them.  The  investor  should  be  sure  of  two  things: 
i.  the  safety  of  the  principal,  2.  regularity  in  the  payment  of  the  in- 
•  terest.  There  is  great  danger  of  default  from  causes  not  anticipated  by 
.the  farmer  and  over  which  he  has  no  control. 

Electric    Railway    Stock. 

Of  recent  stock  this  is  the  most  popumr  and  in  many  instances 
the  most  profitable.  The  introduction  of  electric  power  has  reduced 
the  working  expense  one-half  and  in  most  instances  has  doubled  the 
traffic  without  any  reduction  in  fares.  The  buyer  should  make  sure 
that  the  road  is  in  a  busy  community  able  to  sustain  it,  that  its  fran- 
chise will  protect  it  from  dangerous  competition,  and  that  the  securities 
have  been  legally  issued. 

Substitution    Securities. 

There  have  recently  been   formed  several  large  companies  whose 


AND   OTHER   SECURITIES. 


business  it  is  to  issue  bonds  on  the  security  of  other  bonds.  The  idea 
is  similar  to  that  of  real  estate  title  insurance.  Such  companies  are 
supposed  to  have  superior  facilities  for  investigating  securities.  They 
purchase  those  which  they  consider  good  and  at  the  best  prices  pos- 
sible. These  they  deposit  with  some  trust  company  or  banking  in- 
stitution. With  these  bonds,  which  they  buy,  as  their  original  prop- 
erty, they  issue  new  bonds  of  their  own  which  they  sell  to  the  public 
and  which  they  guarantee.  The  differences  in  prices  and  in  interest 
make  up  their  profits. 

Stock    Quotations. 

The  stock  quotations  as  given  in  our  daily  and  financial  papers 
are  easily  understood.  In  some  instances  the  price  offered  by  buyers 
and  the  price  asked  by  sellers  are  both  given.  Bonds  quoted  for  in- 
stance at  99@ioo  would  indicate  that  if  you  wish  to  sell  yo'j  can  get  99 
and  if  you  wish  to  buy  they  will  cost  you  100. 

Bottomry    Bonds. 

A  bottomry  bond  is  a  kind  of  mortgage  peculiar"  to  shipping.  K 
is  a  conveyance  of  the  ship  as  security  for  advances  made  to  the  owner. 
If  the  ship  is  lost,  the  creditor  loses  his  money,  and  has  no  claim 
against  the  owner  personally.  It  is  allowable  for  a  loan  mftde  on  such 
a  bond  to  bear  any  rate  of  interest  in  excess  of  the  legal  rate.  A  vessel 
arriving  in  a  foreign  port  may  require  repairs  and  supplie?  before  she 
can  proceed  further  on  her  voyage,  and  in  occasions  of  this  kind  a  bot- 
tomry bond  is  given.  The  owner  or  master  pledges  the  keel  or  bottom 
of  the  ship,  a  part,  in  fact,  for  the  whole,  as  a  security. 

General    Mortgages. 

A  mortgage  is  a  conveyance  of  property  for  the  purpose  of  securing 
a  debt,  with  the  condition  that  if  the  debt  is  paid,  the  conveyance  is  to 
become  void.  A  mortgage  of  personal  property  is  called  a  chattel  mort- 
gage. A  mortgage  in  form  is  really  a  deed  of  the  land,  with  a  special 
clause  stating  that  the  grant  is  not  absolute,  but  only  for  the  security 
of  the  debt.  It  is  usual  for  the  debtor  at  the  time  of  executing  the 
mortgage  to  also  execute  a  bond  or  promissory  note  in  favor  of  the 
creditor  for  the  amount  of  the  debt.  This  is  called  a  mortgage  note. 
When  land  is  bought  by  one  who  is  unable  to  pay  for  it  in  full,  it  is 
common  for  the  purchaser  to  give  back  to  the  grantor  a  mortgage  on 
the  land  conveyed  for  the  unpaid  balance.  Mortgages  are  frequently 
given,  in  cases  where  there  is  a  debt  existing,  to  secure  or  indemnify 


128 


STOCKS,    BONDS, 


AND   OTHER   SECURITIES. 


129 


the  mortgagee  against  some  liability  which  he  may  possibly  incur  on  be- 
half or  for  the  benefit  of  the  mortgagor.  For  instance,  where  a  man 
has  endorsed  another's  note  for  the  latter's  accommodation,  or  gone  on 
his  bond  as  surety,  the  latter  may  execute  to  the  former  a  mortgage  of 
indemnity.  When  a  married  man  makes  a  mortgage  his  wife  should 
sign  with  him,  in  order  to  cut  off  her  dower  rights.  The  power  of  a 
corporation  to  make  a  mortgage  is  regulated  by  its  charter  or  the  gen- 
eral law  under  which  it  is  organized.  Religious  corporations  can  mort- 
gage only  upon  consent  of  the  court.  All  mortgages  must  be  iccorded 
in  the  office  of  the  register  of  deeds  for  the  county  in  which  the  property 
is  located.  The  object  of  recording  is  to'give  notice  of  the  existence  of 
the  mortgage  to  any  one  who  might  wish  to  purchase  the  land,  or  to  take 
a  mortgage  upon  it.  There  may  be  several  mortgages  upon  the  same 
property.  The  first  mortgagee  is  entitled  to  be  paid  in  full  first,  then 
the  second,  and  so  on.  The  mortgagee  may  use  his  mortgage  as  security 
for  loans  or  may  assign  it  as  he  pleases.  When  the  requirements  of  a 
mortgage  are  not  met  the  holder  has  under  certain  conditions  the  right 
to  foreclose,  that  is  to  advertise  the  property  for  sale,  and  within  a  time 
fixed  by  law,  to  sell  it  to  satisfy  the  mortgage.  It  is  usual  for  the 
mortgagor  to  insure  the  property  for  the  benefit  of  the  mortgagee. 


EXAMINATION  QUESTIONS. 

I.  Enumerate  some  of  the  advantages  to  the  general  commerce  of 
the  country  of  our  stock  exchanges. 

a.  What  are  Consols  ?  Explain  the  meaning  of  U.  S.  45.  7^07 
Registered. 

3-  If  Pennsylvania  R.  R.  stock  is  quoted  in  New  York  at  52^  and 
in  London  at  54^3,  with  exchange  at  4.88,  what  is  the  gold  advantage 
or  disadvantage  to  a  Londoner  who  buys  1,000  shares? 

4«  Distinguish  between  the  two  classes  of  dealers  who  generally 
operate  on  stock  exchanges. 

5«  Give  some  particulars  of  the  history  and  workings  of  the  New 
York  Stock  Exchange. 

6.  What  is  meant  by  selling  stocks  or  bonds  in  the  regular-way  ? 
7«  What  is  a  ticker?     Give  particulars  of  its  use. 

8.  Distinguish  between  the  use  of  the  terms  bear  and  bull\n  stock 
exchange  manipulations.  What  is  a  hedge  ? 

9«  A  broker  buys  1,000  shares  of  stock  for  a  customer  and  sells  it 
ygain,  what  should  his  commission  amount  to? 

10.  Explain  the  meaning  of  puts  and  calls. 

11.  "  The  speculator  usually  trades  on  margins."     What  is  mear' 
by  this? 

12.  What  is  the  general  commercial  meaning  of  securities  ? 

13 •  Explain  the  meaning  of  mortgage  bonds,  debentures,  certificates 
of  stock,  syndicate,  substitution  securities. 

14 •  Explain  the  difference  between  par  and  market  value.  Why 
do  stocks  and  bonds  vary  in  value? 

15-  What  is  the  dividend?  What  is  the  usual  commission  of  a 
stock  broker  ? 

16.  Is  the  income  from  bonds  affected  by  the  prosperity  of  the 
business  or  corporation?  Explain. 

i?«  If  I  buy  3^  per  cent.  U.  S.  bonds  at  H3^i,  what  rate  of  in- 
terest do  I  receive  ? 
(130) 


STOCKS,    BONDS,  135 


18.  At  what  rate  should  stock  paying  annual  dividends  of  12  per 
cent,  be  bought  to  realize  7^  per  cent,  on  investment? 

19.  Stock  is  originally  bought  at  37}^.     It  is  doubled  by  "  water- 
ing "  three  times.     It  nows  pays  quarterly  dividends  of  4^  per  cent. 
What  per  cent,  does  it  pay  on  original  investment  ?    (Ans.  384  per  cent.) 

20.  I  bought  720  shares  railroad  stock  at  71  y&  through  a  broker, 
an  a  margin  of  10  per  cent.,  and  he  sold  for  me  at  74^.     What  per 
cent,  profit  did  I  make  on  my  actual  investment?     (Ans.  44  per  cent  , 
nearly). 

21.  At   what   price   must   U.    S.  3^'s.  be  bought  to   net  4  per 
cent.  ? 

22.  What  is  meant  by  the  settlement  days  of  English  exchanges? 

23.  Explain   the  following  stock  exchange  terms:    Pool,  boomt 
panic,  trading  on  the  curb,  a  wash  sale,  buyer  3,  bucket-shops. 

24.  Distinguish  between  selling  dividend- on  and  selling  ex-divi- 
dend. 

25.  Discuss  in  a  general  way  the  business  of  brokers  in  large  cities. 
Why  do  merchants  and  manufacturers  find  it  to  their  advantage  to  em- 
ploy brokers  ? 

26.  Give  the  successive  and  necessary  steps  in  the  formation  Mi  a 
joint  stock  company. 

27.  Why  are  companies  who  exist  and  belong  in  one  State  organ- 
ized under  the  laws  of  another  State  ? 

28.  To  what  extent  are  purchasers  of  shares  of  stock  responsible 
for  the  liabilities  of  the  concern  represented? 

29.  Explain  very  fully  the  difference  as  to  resource  and  liability 
between  a  bondholder  and  a  stockholder. 

30.  How  can  the  stock  of  a  company  or  corporation  be  increased  ? 

3i«  Explain  clearly  the  difference  between  a  stock  company  and 
a  corporation. 

32.  What  is  the  effect  of  an  arrangement  between  partners  as  to 
sharing  the  liabilities  of  a  concern?     How  about  share-owners  in  this 
particular  ? 

33.  How  may  a  stock  company  be.  dissolved  ? 


132  AND   OTHER   SECURITIES. 

34-  What  is  the  difference  between  a  voluntary  association  such  as 
a  society  or  club  and  a  stock  company? 

35 •  Explain  what  is  meant  by  preferred  stock.  What  is  treasury 
stock  ? 

36*  In  reports  of  banks,  insurance  companies,  and  other  large  cor- 
porations we  notice  that  large  sums  of  money  are  classed  as  surplus 
fund.  How  is  this  fund  formed,  to  whom  does  it  belong,  and  why  is 
it  held  by  the  corporations  ? 

37-  Explain  very  fully  the  meaning  of  Limited  when  it  forms  par 
of  the  legal  title  of  a  company. 

38.  A  invests  $10,000  in  the  stock  of  a  manufacturing  company  j 
B  invests  $10,000  in  the  stock  of  a  national  bank;  C  invests  $10,000 
in  the  stock  of  a  limited  liability  publishing  company.  All  three  con- 
cerns fail  and  their  existing  assets  apart  from  the  liability  of  the  stock- 
holders is  10  cents  on  the  dollar.  How  much  will  A,  B,  and  C  lose 
respectively  ? 

39-  Can  A  transfer  a  share  of  stock  to  B  ?     Give  full  particulars. 

40*  Explain  clearly  the  two  distinct  methods  by  which  corpora- 
tions may  be  called  into  being.  Can  the  members  of  a  corporation  be 
indefinite  as  to  number?  Explain.  Can  they  be  indefinite  as  to 
person  ? 

4*«  Could  a  municipal  corporation  enforce  a  by-law  forbidding 
the  use  of  its  streets  to  others  than  its  own  citizens  ?  Why  ? 

42.  If  all  the  members  of  a  corporation  die,  to  whom  will  the 
property  interests  pass  ?  Will  the  corporation  still  exist  ? 

43»  What  is  the  purpose  of  the  coupons  which  we  find  attached  to 
bonds  ? 

44-  Distinguish  between  the  franchise  of  a  railroad  and  that  of  aj> 
individual. 

45 •  What  is  arbitrage  ? 

4<*«  Give  fully  some  of  the  advantages  which  stock  companies  and 
corporations  have  over  partnerships. 

47.  Discuss   the   subject   of  investments   showing   the   ujvestnrg* 

chances  of  gain  or  liability  to  loss. 

48.  The  United  States  government  makes  and  issues  money  ana 


STOCKS,    BONDS,    AND   OTHER   SECURITIES.  133 

has  its  vaults  well  filled  with  coin  and  bullion.     Why  is  it  necessary 
to  issue  government  bonds  ? 

49«  What  provision  is  usually  made  for  the  redemption  of  munici- 
pal bonds  which  have  a  long  period  to  run  ? 

50-  Is  it  legal  to  sell  shares  of  stock  and  issue  mortgage  bonds 
upon  the  same  property?  What  relationship  do  they  bear  one  to  the 
other  ? 

51.  What  is  meant  when  we  say  that  a  certain  railway  is  in  the 
hands  of  a  receiver  ? 


Transportation  of  Mail,  Money,  and  Merchandise. 


History   of  Transportation. 

The  Romans  had  an  admirable  system  of  roads,  and  a  highway 
legislation  not  unlike  that  now  prevailing  in  France.  But  in  the  middle 
ages  both  the  roads  and  the  law  were  allowed  to  decay.  As  the  central 
governments  of  Europe  grew  in  power,  from  the  sixteenth  to  the 
eighteenth  century,  they  also  laid  claims  to  rights  over  the  roads;  first 
in  the  form  of  a  right  to  levy  tolls;  and  later  in  undertaking  to  build 
roads,  and  maintain  them  under  their  own  control.  Throughout  the 
continent  the  road  taxes  were  oppressive  and  the  highways  extremely 
bad.  A  thorough  reform  was  instituted  in  France  by  revolutionary 
legislation  which  provided  for  roads  free  from  tolls,  and  supported  by 
the  nation.  Similar  legislation  was  carried  out  during  the  same  period 
in  other  parts  of  the  continent.  In  England  the  course  of  events  had 
been  different.  The  roads  had  always  been  recognized  as  the  king's 
highways.  The  experiment  of  tolls  was  cautiously  tried.  Turnpike 
trusts  were  introduced  at  the  beginning  of  the  last  century  with  tolerable 
success.  The  early  American  system  was  modeled  upon  that  of  En- 
gland— especially  so  in  New  England.  The  development  of  the  canal 
system  in  England  and  America  was  almost  simultaneous  with  that  of 
turnpike  roads.'  In  internal  navigation  France  took  the  lead  while  in 
railroad  building  England  took  the  lead.  Competition  has  increased 
greatly  the  speed  and  reduced  materially  the  expense  of  transportation. 
By  the  study  of  the  prevailing  winds,  the  speed  of  sailing  vessels  on 
many  frequented  routes  was  nearly  doubled,  and  the  expense  of  carriage 

[135] 


136  TRANSPORTATION   OF   MAIL, 


thereby  greatly  diminished.  Fifty  years  of  constant  improvement  in 
postal  facilities  have  been  marked  by  a  reduction  of  postal  charges  to 
less  than  one-fifth  what  they  were  at  the  beginning.  There  has  been 
the  same  kind  of  improvement  and  reduction  in  the  steamship  service. 
When  ocean  steamships  were  first  introduced,  it  was  not  supposed  that 
they  could  ever  compete  with  sail  for  the  carriage  of  ordinary  freight, 
even  on  the  most  frequented  routes.  Railroads  soon  after  their  intro- 
duction, proved  themselves  more  than  a  match  for  any  competition  from 
the  old  system  of  hauling  in  wagons;  and  transportation  has  now 
reached  such  perfection  that  the  one  cent  per  bushel  which  it  costs  the 
farmer  to  haul  wheat  a  mile  by  wagon,  is  a  higher  rate  than  he  has  to 
pay  per  ton  per  mile  by  railroad.  Or,  to  put  the  same  results  in  an- 
other way,  in  most  of  the  wheat  regions  it  would  not  pay  to  grow  grain 
which  had  to  be  hauled  25  miles  by  wagon ;  in  some  places  the  limit 
of  wagon  hauling  is  as  low  as  ten  miles. 

Economic    Results    of  Improved    Means   of  Transportation. 

The  successive  railroad  improvements,  both  in  engineering  and  in 
management,  culminating  in  the  wonderful  substitution  of  steel  rails 
for  iron,  and  the  enormously  increased  loads  thus  rendered  possible, 
have  produced  such  astonishing  results,  that  it  is  not  safe  to  predict  the 
possibilities  of  the  near  future.  The  most  immediate  effect  of  cheap- 
ened transportation  is  to  increase  the  distance  at  which  it  is  possible  for 
producer  and  consumer  to  deal  with  each  other.  To  the  producer  it 
offers  a  wider  market  and  to  the  consumer  more  varied  sources  of  supply. 
On  the  whole,  cheapened  transportation  is  more  uniformly  beneficial  to 
the  consumer ;  its  temporary  advantage  to  the  producer  very  often  leads 
to  overproduction.  It  has  the  effect  also  of  bringing  about  nearly  uni- 
form prices  the  world  over.  In  the  case  of  less  bulky  manufactured 
products,  these  differences  of  price  almost  disappear,  except  as  they  are 
due  to  artificial  obstructions.  The  time  was  when  nearness  to  market 
was  of  the  greatest  possible  advantage.  At  the  present  time  a  farmer 
can  raise  his  celery  in  Michigan  or  his  beets  in  Dakota  and  market  them 
in  New  York  city  about  as  easily  as  though  he  lived  on  Long  Island. 
It  is  no  longer  location  which  determines  the  business  to  be  carried  on 
in  a  particular  spot,  but  natural  advantages  more  or  less  independent  of 
location.  These  changes  have  had  a  wonderful  influence  upon  inter- 
national relations.  Even  the  barriers  raised  by  high  protective  tariffs 
hardly  avail  to  counteract  the  effects  of  reduced  transportation.  It  is 
the  railroad  or  the  steamboat  which  determines  where  a  new  business 


MONEY,    AND   MERCHANDISE. 


shall  be  developed,  quite  as  often  as  the  policy  of  a  government.  The 
grant  of  special  rates  and  privileges  to  shippers  is  nowadays  the  most 
efficient  kind  of  protection.  It  is  this  quickening  and  cheapening  of 
transportation  that  have  given  such  stimulus  in  the  present  day  to  the 
growth  of  large  cities.  It  enables  them  to  draw  cheap  food  from  a  far 
larger  territory,  and  it  causes  business  to  locate  where  the  widest  busi- 
ness connection  is  to  be  had,  rather  than  where  the  goods  or  raw  mate- 
rials are  most  easily  procured.  With  this  growth  of  city  life,  comes 
the  increased  gain  of  large  dealers  at  the  expense  of  the  small  ;  with 
it  comes  organized  speculation,  and  its  attendant  results,  good  and 
evil  ;  and  with  it  comes  the  development  of  enormous  wealth  in  the 
hands  of  a  few.  It  is  because  these  indirect  results  are  so  far-reaching 
that  the  question  of  government  control  of  transportation  agencies  has 
reached  its  present  importance. 

Transportation    Rates. 

As  a  general  rule  transportation  rates  are  lower  in  Europe  than  in 
America.  Transportation  agencies  in  private  hands  will  of  course  be 
managed  on  business  principles,  that  is,  they  will  charge  all  that  the 
traffic  will  bear.  It  would  seem,  at  first  sight,  as  if  non  -competitive 
points  were  thus  left  entirely  at  the  mercy  of  railroad  managers.  Prac- 
tically, however,  this  danger  is  checked  by  two  important  limitations. 
In  the  first  place,  the  competition  of  different  localities  in  the  same 
market  is  such  that  if  one  railroad  charges  rates  arbitrarily  higher  than 
its  competitors,  it  renders  it  impossible  for  the  localities  along  its  route 
to  ship  goods  at  a  profit,  and  will  thus  quickly  destroy  its  own  traffic  ; 
secondly,  exorbitant  rates  may  induce  the  building  of  a  parallel  rail- 
road ;  and  however  ineffective  such  roads  generally  prove  after  they  are 
built,  the  prospect  of  one  in  the  future  has  the  tendency  to  keep  rates 
down.  The  dangerous  kind  of  discrimination,  and  one  which  cannot 
be  too  strongly  reprehended,  is  that  which  makes  special  rates  for  dif- 
ferent individuals,  doing  the  same  kind  of  business  in  nearly  the  same 
place.  The  rates  of  transportation  in  America  are  partly  regulated  by 
state  and  federal  legislation,  but  more  largely  by  mutual  arrangement 
of  transportation  companies. 

Freight    Companies. 

Prior  to  the  completion  of  the  organization  of  trunk  or  through 
lines,  freight  was  compelled  to  break  bulk  and  suffer  trans-shipment  at 
the  end  of  each  line,  where  a  new  corporation  took  up  the  traffic  and 
10 


TRANSPORTATION  OF  MAIL, 


carried  it  beyond.  To  prevent  this  breaking  of  bulk,  and  to  expedite 
the  carriage  of  freight,  fast  freight  lines  on  separate  capitalization  were 
organized,  at  first  by  the  managers  of  the  railways  themselves  owning 
or  leasing  their  freight  cars,  and  then  made  profitable  by  special 
arrangements  with  the  railways  readily  enough  secured,  because  of  the 
fact  that  the  railway  officials  themselves  were  largely  interested  in  the 
fast  freight  lines.  Notwithstanding  the  fact  that  many  of  the  state  legis- 
latures have  made  laws  to  regulate  the  carrying  trade,  it  is  generally 
known  that  many  large  business  firms,  the  leviathans  of  modern  busi- 
ness, can  and  do  dictate  their  own  terms  between  rival  corporations, 
while  small  concerns  are  compelled  to  accept  the  best  terms  they  can 
get.  Special  contracts  covering  long  periods  of  time  are  made  every 
day  with  heavy  shippers,  under  which  the  common  carrier,  whose  first 
duty  it  is  to  serve  all  equally,  gives  to  certain  houses  a  practical  control 
of  the  markets.  The  names  of  the  leading  freight  companies  such  as 
Merchants'  Despatch,  Union  Line,  etc.,  are  familiar  to  every  one. 

Common    Carrier. 

In  a  legal  sense  a  common  carrier  is  one  whose  regular  business  is 
to  carry  articles  of  personal  property  from  place  to  place  for  the  public. 
Expresses,  stages,  railroads,  canal  boats,  steamboats,  teamsters,  ferries, 
etc.,  are  instances  of  common  carriers.  A  common  carrier  must  carry 
for  every  one  who  desires  to  employ  him  and  is  ready  to  pay  him  his 
reasonable  charge,  so  long  as  he  has  accommodations,  and  holds  him- 
self out  to  carry  the  kind  of  articles  offered.  It  is  the  carrier's  duty  to 
load  the  goods  carefully  and  to  carry  them  safely  and  without  unrea- 
sonable delay,  and  he  is  liable  under  certain  conditions  for  damage  or 
loss  while  in  his  possession. 

A    Bill    of  Lading. 

A  bill  of  lading  is  an  acknowledgment  by  a  transportation  com- 
pany of  the  receipt  of  goods  specified,  and  contracts  for  their  delivery 
at  a  certain  place,  under  conditions  stated  thereon  upon  payment  of 
freight  an'*  expenses.  Bills  of  lading  are  negotiable  and  may  be  trans- 
ferred jy  endorsement,  but  are  of  no  value  apart  from  the  goods  to 
whicii  they  give  title.  A  bill  of  lading  goes  with  certain  named  goods 
and  cannot  be  transferred  to  other  goods  even  though  of  precisely  the 
same  kind  and  price.  Marine  bills  of  lading  are  usually  made  in  tripli- 
cate; one  is  kept  by  the  shipper,  another  by  the  vessel,  and  the 
third  is  sent  by  mail  to  the  person  to  receive  the  goods.  Original  re- 


MONEY,    AND   MERCHANDISE. 


139 


ceipts,  stating  marks  and  quantities  of  goods,  go  with  each  separate  lot 
to  the  freight  sheds  or  vessel,  and  these  are  summed  up  in  a  formal  bill 
of  lading,  for  which  they  are  exchanged,  when  all  the  cases  or  bundles 


ERIE  DESPATCH. 


iBCBlfinj!  .«,.  I    A..       SIS 

WSmitWtSSSS*^         Bsscvrffiw.fwan  »Q     '•     Br.3SSerii.3». 

PHILADELPHIA  &  READING  RD.,  PHILADELPHIA,  PA.,. 


JL3- 


RECEIVED  FROM    V*-^** «.  4.  CU^cU'* .  jjy%4^VrvlLtfv*.,-Uiq -^g^f*'"  ^ ' .a 


MARKS  4KD  NUMBERS. 


DESCRIPTION  OF  ARTICLES. 


CONSIGNEES  mn  DESTINATION 

"Bur^,  Ao^rC/i  V/Av»j 


ERIE  DESPATCH  *** 


Advanced  Charges,  $  |  jL,«^rr^?s 

The  Condltlono  upon  which  the  uDore-m.ntlonea 

ORIQINAL.-SHIPPINC  RECEIPT. 

(To  to  r««urn«ii  la  MMMkj  ,,,,„,.,    .«»_ 


Exchange  for  Bill  of  Lading,  at   333  Chestnut  Street. 

transportation  bf  the  CRIK  DISPATCH  are  printed  on  the  back  hereo.. 


ERIE  DESPATCH. 

ERIE  &  PACIFIC  DESPATCH  DIVISION.    GREAT  WESTERN  DESPATCH  DIVISION.    SOUTH  SHORE  LINE  DIVISIO 


PHILADELPHIA  &  READING  RD.,  PHILADELPHIA,  PA.,       ^*jcl.  l<{ 189t>_. 

RECEIVED  FROM— JVe*i4.i,/>  C7«4*U%<in.    V^xfl.y  143.  4»  <r\-*M 

.«.i^&W^^^^J^^^^^^g&g.^g:g 


DESCRIPTION  OF  ARTICLES'. 


SuD|.c"«'c?r»etlo.. 


CX^XJi!r'jr)TffiT'^~"^  *- 


Advanced  Charges 


oaded  in     f- 


Car,  No.    ..•*•>.*•> 


OUPLICATE.-FORWAROING  ORDER. 

a.  M  «t.l.H  »,  R,.,^  w>  Received  by. 


belonging  to  the  particular  shipment  have  been  delivered.  The  part  of 
the  receipt  marked  invoice  is  kept  by  the  receiver  of  the  freight,  and 
the  other  end  is  given  to  the  drayman.  In  making  small  shipments,  or 


140 


TRANSPORTATION  OF  MAIL, 


shipments  at  short  distances  it  is  not  usual  or  necessary  to  make  out  a 
formal  bill  of  lading.  Of  course  when  no  bill  of  lading  is  made  out 
the  receipt  should  be  preserved  by  the  shipper.  The  full  contract  is 
usually  printed  on  the  receipt  but  it  must  be  remembered  that  a  receipt 
is  not  a  negotiable  instrument  and  cannot  be  used  as  security  for  money. 
The  parties  to  a  bill  of  lading  are  three,  the  shipper,  the  consignee,  and 
the  transportation  company.  The  declaration  of  having  received  the 
goods  in  good  order  and  condition  and  the  consequent  obligation,  sub- 
sequently expressed,  of  delivering  them  in  like  good  order  and  condi- 
tion, is  sensibly  lessened  in  its  importance  by  the  additional  clause  now 


FORV.124A. 

ISPATCH. 


For  Information  and  Bills  of  Lading  apply  at  33  S.  Sixth  St.,  W.  F.  TREXLER.  Agent. 


MARK  PACKAGES  "C.  S.  D."  AND  DELIVER  AT  DEPOTS  OF  PHILADELPHIA  &  READING  R.  R. 

Dread  and  Hut 


South  Wti»r»fc* 


Porttichraond. 

Kaljtn'i  Pciul,  Camden.  N.  J 


l.indrns>iree..Can,den.N  J 


btiow  in  apparent  «o~t  orde 


PMhdelphio.  Pa., 

5A*AX|      ^0.    j<|  ..... 

r,  netpl  af  notedjconlcnu  and  condition 


1895* 
Street. 


d.,.! •  -  -  - 

II  It  n.ulu»ll»  4gn«d  In  con.ldtr»ll'.n  ot  lr.t  rate  of  freight  named  In  thr  Bill  or  La.linu  Icr  which  Ihli  rer.oipt  li  to  be  exfl.ngt.l.  and  u  to  e.ch  cirrirr  of  all  or  any 
of  laid  property  or<7.l!  an,  port.on  of  .aid  ,oul*  to  d«..ln.tion.  and  a.  to  each  part,  ai  an.  lin>.  Inureiud  in  a^l  or  any  ot  ...d  property,  that  erery  ,erv,c.  to  be  per- 
formcj '-triund-r  >h>n  b.  tabltrt  to  »1  the  condiuoni  whether  printed  o.  written,  tndomd  heraon.  and  which  arc  he.-c-!w  afteed  to  by  the  ihippti  and  by  him  accepted 


MARKS  AND  NUMBERS. 

(  Pall  Name  of  Consignee  mmt  bo  given.) 


•|    cci 


The  Condition  upon  which  the  above  mentioned  property  is  i 
ed  lor  transportation  are  printed  on  the  back  hereof. 


adopted  by  almost  all  transportation  companies,  namely,  "contents and 
condition  of  contents  of  packages  unknown."  Should  the  goods  or 
part  of  them  be  shipped  in  a  damaged  condition,  or  in  a  bad  condition 
of  packing,  a  note  to  that  effect  should  be  made  by  the  transportation 
company  on  the  bill  of  lading,  which  ceases  then  to  be  a  clean  bill  of 
lading.  Like  any  other  instrument  of  credit,  a  bill  of  lading  may  be 
either  deposited  with  a  creditor  as  security  for  money  advanced,  or 
transferred  to  a  buyer  by  means  of  endorsement,  and  the  property  of 
will  be  thereby  either  mortgaged  or  assigned.  Acting  upon  this 


MONEY,    AND   MERCHANDISE. 


I4Z 


principle,  the  owner  declares  in  the  bill  of  lading  that  the  goods  shall 
be  delivered  unto  the  consignee  or  his  assigns.     When  a  merchant  is 


O-Form  163. 


PENNSYLVANIA  RAILROAD  CO.-PENNSYLVANIA  COMPANY. 


The  *  UNION  LINE  is  thr  authori/.er)  THROUGH  FKEIGIIT  1. I 
raufa  west  of  Pittsburgh,  which  secures  to  thr  p.-ope'rty  entrusted  t 
movement  ^hjtt  the  roads  <wer_which  it  passes  possess 

0.  S.  GRAY.  Manager.  Columbu.rOhio7 "  "                             JOHTrfTMAliNTA^nt.  ~ 
JNO.  T^PENNISTON^Aydlter. Pittsburgh.  f». 16  Sooth  Fifth  Street. 


of  the  PENNSYLVANIA  RAILKOAD.  and  its  affiliated 
ts  charge  the  best  facilities  for  fast  and  uniforru 

iTAToAWSON,  Western  Supt.,  Chicago.  III. 
r.  H.  KINGSBURY.  Eastern  Supt,  New  York. 


PHILADELPHIA.    Pt  ftMVVivANl*   R*, 

BALTIWORC    DC  POT,   Co* we*    NOR 


Philadelphia.  Pa..  ..............  .......  JVH  t.  S  ...1869.  - 


Bill  of  Lading  M>,£  3/.v(>_ 

RECEIVED  from  CuLA.         ^ifrXAg**,  „*****.  .........   «••  proper',  described  below. 

In  apparent  good  order,  except  a-  noted  (contents  and  condition  of  contenta  of  packagea  unknown),  marked,  consigned  and  destined  aa 
indicated  below,  which  the  if  UNION  LINE  agree,  to  carry  to  the  add  destinition.  if  on  the  Pennsylvania  Railroad  tyatem  otherwise  to 
deliver  to  another  carrier  on  the  route  to  aaid  destination. 

IT  IS  MUTUALLY  AGREED,  In  consideration  of  the  rat»  of  freight  hereinafter  named,  as  to  each  carrier  of  all  or  any  of  slid 
property  over  all  or  any  portion  of  sai<r  route  to  destination,  and  as  to  each  party  »t  ony  time  .merctted  in  all  or_any  of  said  property 
that  every  aervict  to  be  performed  hertunder  ahall  be  subject  to  all  the  conditions,  whether  printed  or  written,  herein  contained,  and  which 
•re  hereby  agreed  to  by  the  shipper  and  by  him  accepted  for  himself  and  his  assigns  n  ju.t  and  reasonable. 

Upon    all    the    conditions,  whether    printed   or  written,   herein    contained,    it   la    mutually    agreed    that    the 
fHILADELPHIA.  PA.,  to 
It  to  be,  In  cents,  per  100  Iba  : 


..JueSa.s  ssMux^SftftiSi  &&£&!&# 

floodi  or  l>y  fir*,  or  by  ou»rijiuo«(  or  bj  rtoU,  itrlkM  01  <iopp»g«  of  labor ,  or  hj  iMkin, 
breakage,  cliiflup,  IOM  ID  wfiabi,  cbftDft.*  lo  wwihor,  but,  frost,  wet,  or  decay;  or  from 

2.    Ho  carrier  li  t.ound  to  c»rr t  wld  prvMlty  bf  Any  ptrtlcoltr  intn'or  TMM!,  or  In 
tim«tArur  it»rucaUrm»ratei,  orotherwlMthwi  wlthM  r»MoD*bl6de*i-..ich  Mtug«ocr»l 
i  will  |>oriulL     i:\ery  c»rrl«r  ibfcJl  b*v«  th«  rigttt,  in  ctM  of  ueccully,  to  forward 


to  or  uku  from  >  ititloD  «  whloi  there  U  no  regultrtj  iptxilo l«J  •gem,  .bull  tie  entlnlr 
>t  run  of  owoei  obeli  aolooctej  from  on.  y  until  loidetf  Into  can .  »nd  «h«n  receiid 

.ll£b°i  i^"Stf55  Kir^Ticb'ed'tKT'tr^l'"  " 

6.  No  carrier  l;(-r--.r,dej  »  .,:  >  */ry,or  be  Iwtle  In  »nj  way  for  ftoj  documcou,»p«cie 
or  for  an.  anicl.  of  eitrwrdioar;  talM  not  ipeciCcalli  rited  In  tie  piMHbtd  clai.iScV 
tloni,  un'leaa  >  ipecia]  agneiueDt  U  do  io.  and  •  it'imlaud  <alue  of  the  .rUoIea,  are 


unable  to  insert  the  name  of  the  consignee  at  the  time  the  bill  of  lad- 
ing is  made  out,  a  bill  to  order  is  drawn  up,  wherein  the  consignee's 


14* 


TRANSPORTATION  OF  MAItp 


N.  AVA.LTO2ST,  Freight  A-gent, 
No.  8  WALNUT  STREET. 


MONEY,    AND   MERCHANDISE.  143 

name  is  superseded  by  the  words,  shipper's  order,  or  simply  order ;  it 
being  thus  understood  that  the  goods  shall  be  delivered  to  whomsoever 
presents,  at  point  of  destination,  the  bill  of  lading  duly  endorsed  by 
the  shipper.  By  such  a  simple  arrangement  as  a  bill  to  order,  the  mer- 
chant is  enabled  to  sell  the  goods  while  they  are  at  sea  or  in  transit,  and 
a  consignment  of  merchandise  may  change  hands  several  times  before 
arrival  at  its  destination.  When  a  case  to  be  shipped  has  been  prop- 
erly entered  and  weighed,  it  is  then  ready  to  be  manifested  or  way- 
billed,  as  no  shipment  is  allowed  to  go  forward  without  a  way-bill. 
This  way-bill  is  simply  a  memorandum  of  the  consignment  together 
with  full  and  complete  shipping  directions,  giving  also  the  number  of 
the  car  into  which  the  case  has  been  loaded  and  the  point  to  which  the 
car  is  carded.  The  freight  conductor  has  way-bills  for  all  the  goods 
which  he  carries.  See  illustration.  In  the  column  headed  freight  are 
extended  the  total  charges  between  points  from  and  to  which  the  way- 
bill is  made.  In  the  column  headed  advances  are  extended  the  amounts 
paid  out  by  the  forwarding  station  as  back  charges.  When  a  shipment 
is  received  from  a  connecting  road  at  a  junction  the  agent  of  the  re- 
ceiving road  pays  the  freight  charges  against  the  shipment  up  to  that 
point ;  these  are  termed  advanced  charges,  which  is  a  credit  to  the  lat- 
ter line  because  it  advanced  the  money.  In  the  column  prepaid  are 
extended  the  amounts  collected  from  the  shipper.  When  a  shipment  is 
prepaid  a  statement  is  made  on  the  way-bill  giving  the  point  to  which 
the  prepayment  is  to  cover,  and  is  a  debit  to  forwarding  station  and  a 
credit  to  the  receiving  agent.  Card  tickets  to  be  attached  to  the  out- 
side of  the  car  are  made  from  the  way-bills.  The  freight  conductor 
turns  over  way-bill  and  merchandise  to  the  agent  at  the  point  of  desti- 
nation. 

General   Freight   Rates. 

There  are  so  many  things  which  enter  into  consideration  in  forma- 
tion of  freight  rates  by  railways  that  no  specific  rules  can  be  given. 
Generally  speaking  trade  seeks  the  cheapest  path  from  the  producer  to 
the  consumer.  The  purpose  of  interstate  commerce  laws  is  to  secure 
for  every  person  and  place  just  and  equal  treatment  at  the  hands  of  the 
transportation  companies.  All  rates  must  eventually  be  brought  to  a 
uniformity  through  competitive  influences.  Many  instances  could  be 
cited  of  large  concerns  whose  shipping  is  so  necessary  to  a  particular 
road,  that  they  are  in  a  position  to,  in  a  limited  way,  dictate  their 
own  terms.  This  is  sometimes  done  between  competing  lines  by  an  as* 


144  TRANSPORTATION  OF  MAIL, 

sociation  of  shippers,  so  that  rates  are  largely  a  variety  of  conditions 
and  compromises.  Frequently  joint  and  uniform  rates  are  made  by 
agreement  between  the  general  freight  agents  of  competing  roads.  The 
rates  between  the  East  and  West  are  regulated  largely  by  what  are 
known  as  the  Trunk  Line  and  Central  Traffic  Associations.  The  rates 
between  New  York  and  Chicago  are  taken  as  a  basis  per  mile  upon 
which  rates  between  intervening  points  are  computed. 

Differential   Freight   Rates. 

The  name  differential  as  applied  to  freight  rates  refers  to  the  dif- 
ferences which  are  made  by  railroad  companies.  Certain  routes  are  by 
agreement  allowed  to  charge  a  lower  rate  than  others  running  to  the 
same  points.  From  each  of  the  eastern  cities  there  are  two  classes  of 
roads — the  standard  lines  and  the  differential  lines.  The  standard 
lines  have  the  advantage  of  more  direct  connections  and  better  freight 
organization  facilities.  The  differential  lines  reach  the  freight  destina- 
tions by  circuitous  routes,  in  some  instances  by  almost  double  the  mile- 
age. With  a  view  of  equalizing  these  conditions,  the  general  traffic 
associations  allow  the  differential  lines  to  carry  freight  at  a  lower  rate 
per  mile  than  the  rate  charged  by  the  standard  lines.  The  standard 
lines  from  New  York  to  the  West  are  the  New  York  Central,  Pennsyl- 
vania, and  the  Baltimore  and  Ohio.  All  the  other  roads  having  a  con- 
nection East  and  West  are  classed  as  differential.  The  standard  lines 
charge  4  cents  a  100  pounds  more  for  first  class  freight  thai>  the  differ- 
ential lines. 

Passenger    Railway    Rates 

Local  passenger  rates  are  usually  based  on  2^  or  3  cents  a  mile 
for  a  single  ride,  and  for  a  round  trip  two-thirds  of  the  double  rate. 
The  through  passenger  rates  are  made  by  the  mutual  agreement  of  the 
general  passenger  agents  of  the  several  roads  interested.  The  entire 
amount  charged  is  proportioned  between  the  roads  carrying  the  rx.3- 
sengers  according  to  the  mileage  of  each.  Sometimes  it  is  necessary  to 
take  into  consideration  also  the  fact  that  one  section  of  tht  chroughline 
is  permitted  to  charge  3  cents  per  mile  for  local  traftie  while  another 
section  of  the  through  line  passing  through  a  different  state  may  not 
charge  more  than  2^£  cents  per  mile  for  local  traffic.  By  a  stop-off  is 
meant  a  break  in  the  continuous  passage  at  some  intermediate  point. 
Stop-off  privileges  are  granted  on  certain  trains  at  no  additional  ex- 
pense. Most  of  the  railways  sell  what  are  known  as  mileage-book 


MONEY,    AND   MERCHANDISE.  145 

tickets.  These  are  books  good  for  1,000  miles  of  transportation.  They 
are  usually  sold  for  two  cents  a  mile  and  can  be  used  only  by  the  pur- 
chaser. Coupon  tickets  are  those  issued  by  one  road  for  transportation 
over  several  roads.  Almost  all  through  tickets  are  of  this  class. 
Ticket  scalpers  are  men  whose  business  it  is  to  buy  and  sell  tickets 
at  cut  rates.  They  are  not  permitted  to  do  business  in  Pennsylvania 
and  soms  other  states. 

Freight    Classification. 

The  transportation  business  of  the  United  States  is  so  varied  and 
complicated  that  a  proper  study  of  its  freight  tariffs  and  classifications 
would  require  much  more  space  than  can  be  given  to  this  paragraph. 
Most  of  the  transportation  companies  issue  freight  guides  which  give  in 
detail  the  classifications  of  all  kinds  of  commodities.  It  is  evident  that 
it  should  cost  less  to  ship  a  hundred  pounds  of  wheat  from  Minneapolis 
to  New  York  than  to  ship  a  hundred  pounds  of  jewelry  from  New  York 
to  Minneapolis.  The  farmer  would  necessarily  be  obliged  to  quit  grow- 
ing wheat  if  it  cost  him  60  cents  a  bushel  to  ship  it  to  the  sea-board. 
The  jeweler  can  easily  afford  to  pay  two  or  three  dollars  to  transport 
one  hundred  pounds  of  jewels  from  one  point  to  another.  A  transpor- 
tation company  in  making  a  schedule  of  rates  would  consider,  i.  the 
competition  of  other  roads,  2.  the  total  volume  of  business,  3.  the 
direction — that  is,  of  loaded  trains  or  empty  trains,  4.  the  value  of  the 
article,  5.  the  bulk  and  weight,  6.  the  risk  of  transportation,  7.  the 
facilities  for  loading  and  unloading,  8.  the  special  equipment,  if  any, 
necessary.  The  classifications  now  generally  adopted  by  railways  have 
been  brought  about  by  a  variety  of  influences  and  many  compromises. 
At  the  present  time  there  are  three  distinct  freight  classifications  :  i. 
The  official  classification  covering  the  territory  east  and  northeast  of 
Chicago.  2.  The  southern  classification.  3.  The  western  classifi- 
cation. That  is  to  say  that  a  particular  commodity  might  be  considered 
first-class  in  one  section,  second-class  in  another,  and  third-class  in 
another. 

Freight    Regulations. 

When  freight  is  consigned  to  a  certain  party,  the  freight  is  delivered 
to  that  party  only,  or  upon  his  written  order.  When  consigned  to  one 
party  in  care  of  a  second  party,  the  freight  is  delivered  to  the  second 
party  only,  or  upon  his  written  order.  Wiien  consigned  to  one  party, 
notify  a  second  party*  the  second  party  is  notified,  but  delivery  of  the 


146  TRANSPORTATION   OP  MAIL, 

freight  is  only  made  upon  the  presentation  and  surrender  of  the  original 
shipping  receipt  or  bill  of  lading,  properly  endorsed  by  the  first  party. 
When  consigned  simply  to  order  or  to  order  of  shipper,  the  freight  is 
only  delivered  upon  presentation  and  surrender  of  the  original  shipping 
receipt  or  bill  of  lading,  properly  endorsed  by  the  party  to  whom  it  was 
issued.  When  consigned  to  order  of  a  certain  party,  the  freight  is  only 
delivered  upon  the  presentation  and  surrender  of  the  original  shipping 
receipt  or  bill  of  lading,  properly  endorsed  by  the  party  to  whose  order 
the  property  is  consigned.  No  freight  or  any  portion  of  a  consignment 
can  be  removed  from  a  station  until  all  the  charges  are  paid. 

Transportation   Accounts. 

There  are  no  more  complicated  systems  of  accounts  than  those 
necessary  to  railroading.  The  collecting  of  freight  and  holding  local 
agents  responsible  for  it,  the  dividing  of  the  freight  collected  between 
several  lines,  the  following  of  freight  cars,  the  checking  and  auditing 
of  way-bills,  the  proportioning  of  ticket  receipts,  the  purchasing  of 
material,  the  traffic  expenses,  and  a  thousand  and  one  other  things  go 
to  make  up  a  system  of  account  keeping  which  in  the  best  regulated 
companies,  is  remarkable  for  exactness  and  thoroughness.  We  give 
here  in  tabulated  form  an  analysis  of  a  set  of  railway  accounts : 

I.  Capital  Stock  and  Funded  Debt. 

Supt.  and  Engineers  Expenses 
Right  of  way 
Road-bed  and  Track 


2.  Cost  of  Road  and  Equipment 


Rolling  Stock 

Repair  Shops 

Telegraph  Lines 

Offices 

Additions  and  Betterments 

(  Passengers  and  Freigm, 
Earnings       <  Express  and  Mail 

3.  Income 

rui,      c~        -    /  Interest  and  Rents 
Other  Sources   j  gurplus  of  preyious  yeaj( 


4.  Operating  Expenses 


General  Expenses 

Traffic  Department  Expenses 

Maintenance  of  Way 


Maintenance  of  Engines  and  Cars 
Conducting  Transportation 

{Interest 
Taxes  $ 
Franchise  Charges 


MONEY,  AND  MERCHANDISE. 


6.  Balance  Sheet  Assets 


7.  Balance  Sheet  Liabilities 


Cost  of  Road 

Cost  of  Equipment 

Real  Estate  and  Buildings 

Stocks  and  Bonds 

Franchise 

Other  Permanent  Investments 

Cash  on  Hand 

Bills  Receivable 

Open  Accounts 

Material  and  Supplies 

Sinking  Fund 

Sundries 

Profit  and  Loss  (Surplus) 

Capital  Stock  (Preferred  and  Common) 

Funded  Debt 

Interest  Due  and  Accrued 

Dividends  Unpaid 

Audited  Vouchers  (Ready  for  Payment) 

Pay- Rolls  (Unpaid) 

Open  Accounts 

Bills  Payable 

Sundries 

Profit  and  Loss  (Deficit) 

Deficit  of  Previous  Year 


Interstate    Commerce. 

The  theory  under  which  the  Interstate  Commerce  Law  was  framed, 
contemplated  the  maintenance  of  the  independent  existence  of  railway 
corporations,  subject  to  such  organic  changes  as  their  owners  might 
from  time  to  time  accomplish  by  contract  among  themselves  in  subor- 
dination to  the  laws  of  the  several  states  under  which  they  held  their 
various  charters,  and  all  working  together  under  a  uniform  national 
control.  The  maintenance  of  through  routes  and  of  through  tariffs 
was  provided  for,  and  it  was  expressly  made  unlawful  for  any  common 
carrier  in  any  manner  to  prevent  the  continuous  carriage  of  freight 
from  the  place  of  shipment  to  the  place  of  destination.  All  agreements 
between  the  various  railway  associations  are  required  by  law  to  be  filed 
with  the  Interstate  Commerce  Commission.  The  fundamental  purpose 
of  the  Interstate  Commerce  Law  is  the  prevention  of  discrimination  of 
every  form.  Before  its  enactment  unjustifiable  discriminations  were 
made  between  business  houses  and  between  different  towns  or  localities; 
also  by  the  secret  cutting  of  rates  and  by  systems  of  rebates;  also  by 
the  granting  of  free  passes.  These  abuses  have  been  greatly  reduced 
through  the  action  of  this  Federal  law.  It  requires  the  establishment 
and  publication  by  carriers  of  tariffs  showing  rates,  fares,  and  charges 
for  all  interstate  carriage  of  passengers  and  freight.  These  tariffs  are 
filed  with  the  commission  and  must  be  absolutely  adhered  to. 


148 


TRANSPORTATION   OF  MAIL, 


Railway    Management. 

The  president  is  the  executive  head  of  tne  company  and  with  the 
aid  of  a  boa-rd  of  directors  he  directs  the  general  policy  of  the  road. 
There  are  also  vice-presidents  and  general  managers  who  have  much  of 
the  active  management  in  charge.  The  superintendent  of  the  roadway 
keeps  the  road  in  good  condition.  The  superintendent  of  transportation 
has  charge  of  the  handling  of  trains.  The  superintendent  of  machinery 
has  charge  of  the  construction  and  maintenance  of  all  rolling  stock, 
and  is  assisted  by  the  master  car  builder.  The  traffic  manager  or  gen- 
eral freight  and  passenger  agent  has  charge  of  the  making  of  rates  and 
the  solicitation  of  business.  The  comptroller  has  charge  of  the  ac- 
counts. The  paymaster  receives  money  from  the  treasurer  and  dis- 
burses it  under  the  direction  of  the  comptroller.  Then  there  are  real 
estate  departments,  legal  departments,  purchasing  departments,  operat- 
ing departments,  roadway  departments,  etc.  The  officers  of  a  very 
large  railway  company  are  given  here  in  tabulated  form: 


1.  President 

2.  Vice  President 

3.  General  Manager 

4.  Secretary 

5.  Treasurer 

6.  Counsel 

^        .    ,,      f  Local  Auditors 

7.  Comptroller  •<  ™        v        . 

^  1  raveling  A 

8.  Purchasing  Agent — Storekeeper 


9.  General 
Superintendent 


10.  Supt.  of 

Machinery 


Receiving  Clerk 
Shipping  Clerk 
Loading  Clerk 
Discharging  Clerk 
Collectors 
Laborers 

f  Yard  Engineers 

-.r     ,  ,,     .          I  Switchman 
Yard  Master    j  Conductors 

(^  Brakeman 
Train  Despatches 
Operators  of  the  Telegraph 
Conductors  and  Brakemen 

f  Record  Clerks  "  Foreign  and  Local" 

•j  Mileage     " 

(  Lost  Car  and  Tracing  Clerks 

{Engineers  and  Firemen 
Hostlers  and  Cleaners 
Mechanics  and  Laborers 
{Mechanics  and  Laborers 
Greasers 
Car  Inspectors 


Station 
Agent 


Train  Master 

Car 

Accountant 


MONEY,    AND   MERCHANDISE. 


II.  Supt.  of 
Roadway 


12.  Traffic 
Manager 


Road 
Master 


Supt.  of 
Bridges 


Supt.  of 
Road 


'  Bridge  Foreman 
Watchman 

Mason  and  Carpenter  Gang 
Section  Foreman 
Gang  and  Track  Walkers 
Wood  and  Water  Tenders 
Floating  Gang  Constructing  in  Transit 


General 
Freight  Agent 


General 
Passenger  Agt 


Division  Freight  Agents 
Traveling  Freight  Agents 
Rate  Clerks 
Tariff  Clerks 

Freight       f  Register  Clerk 
Claim        J  Investigating  Clerk 
~lai  1  Voucher  Clerk 

Agent        [  Special  Agent 

Division  Passenger  Agent 

Traveling  Passenger  Agent 

Rate  Clerk 

Apportionment  Clerk 

Advertising  Agent 


Baggage   Transfers. 

Every  one  in  America  is  familiar  with  the  railway  methods  of 
carrying  passengers'  baggage  from  one  point  to  another.  Usually  a 
bag  or  trunk  can  be  checked  from  and  to  the  points  indicated  on  the 
passenger's  ticket.  In  all  the  large  cities  there  are  transfer  companies 
whose  agents  board  in-coming  trains  and  check  baggage  to  the  passen- 
ger's city  destination.  The  charge  for  this  is  usually  25  cents.  These 
transfer  companies  have  offices  in  the  railway  depots  and  usually  do  the 
business  of  taking  baggage  to  and  from  trains.  When  trunks  are  more 
than  the  regulation  weight  an  over-weight  charge  is  made.  Storage  is 
usually  charged  when  baggage  is  allowed  to  remain  at  a  depot  more 
than  24  hours. 

Baggage   to    Canada. 

If  the  passenger's  ticket  reads  from  an  American  point  to  a  point 
in  Canada  or  Mexico  the  accompanying  baggage  is  usually  checked 
only  to  the  point  where  the  railway  crosses  the  border  where  it  is 
examined  by  a  customs  official  and  re-checked  by  the  baggage  master 
to  the  passenger's  destination.  Passengers  are  expected  to  claim  their 
baggage  at  the  Canadian  or  Mexican  border  and  permit  the  customs 
officer  to  see  that  nothing  dutiable  is  being  carried  across.  This  is 
usually  the  work  of  but  a  few  moments.  It  is  quite  safe,  if  late  at 
night,  to  give  your  trunk  keys  and  baggage  checks  to  the  sleeping-car 
porter  with,  of  course,  a  small  fee  to  keep  him  awake.  Baggage  is 
examined  by  an  officer  of  the  country  into  which  the  passenger  is  go- 


150  TRANSPORTATION   OF  MAIL, 

ing.  Sometimes  excursion  parties  to  Canadian  points  have  their 
baggage  sent  through  in  bond  and  examined  upon  their  arrival.  Un- 
claimed baggage  is  held  at  the  border  until  called  for. 

Food    Staples    and    Transportation. 

About  one-half  of  the  business  of  this  country  consists  in  the  pro- 
duction, conversion,  transportation,  and  final  sale  of  articles  of  food. 
This  consumption  of  food  cannot  stop  even  in  the  hardest  of  hard 
times,  because  the  mosf  productive  country  is  always  within  about  one 
year- of  starvation.  A  pa.,  of  the  food  supply  is  consumed  where  it  is 
produced  but  about  six  times  as  much  become  articles  of  commerce — 
that  is  of  purchase,  sale,  and  transportation.  Western  grain  is  sold  by 
the  farmer  to  the  miller  or  his  agent,  the  flour  is  sold  by  the  miller  to 
the  merchant,  by  the  merchant  to  the  baker ;  finally  the  baker  sells  the 
bread  to  the  consumer.  It  has  been  estimated  that  twelve  tons  of  food, 
fuel,  fabrics  and  fibres  are  moved  one  hundred  and  ten  miles  by  steam 
railways  only,  for  every  man,  woman,  and  child  of  our  population, 
taking  no  account  of  transportation  by  river  or  canal.  Retail  transpor- 
tation by  wagons  costs  more  than  wholesale  transportation  by  railway. 
It  costs  more  to  deliver  the  bread  by  wagon  than  it  does  to  carry  the 
flour  from  which  it  is  made  2,000  miles. 

Transportation    "by    Express. 

The  express  business  of  the  country  is  done  by  a  few  very  large 
private  corporations.  There  are  six  of  these  the  names  of  which  are 
well  known.  The  United  States  Express  is  confined  largely  to  the 
northeastern  portion  of  the  country  with  leading  offices  in  New  York, 
Philadelphia,  Boston,  and  Chicago.  The  Wells-Fargo  Express  has  its 
principal  offices  in  the  far  west.  It  also  does  a  large  foreign  business. 
The  Adams  Express  covers  the  eastern  states  with  principal  offices  in 
New  York,  Philadelphia,  and  Baltimore.  The  Pacific  Express  has  its 
principal  offices  in  San  Francisco,  Galveston,  and  New  Orleans.  The 
Southern  Express  has  its  principal  offices  in  New  Orleans,  Savannah, 
and  Baltimore.  The  American  Express  covers  the  central  and  eastern 
states  with  principal  offices  in  St.  Louis,  Cincinnati,  and  Boston. 
There  are  many  other  express  companies  some  of  which  do  a  large 
carrying  trade.  By  mutual  arrangement  packages  are  delivered  from 
one  company  to  another  where  this  is  necessary  for  the  destination  to 
be  reached,  and  money  orders  of  one  company  are  usually  cashed  by 
Other  companies,  so  that  in  reality  the  public  is  as  well  served  by  a 


MONEY,    AND   MERCHANDISE. 


number  of  com- 
panies as  it  would 
be  if  all  were  un- 
der one  manage- 
ment. In  some 
instances  the  ex- 
press companies 
build  and  own 
their  own  cars. 
The  charges  are 
higher  than  trans- 
portation by 
freight,  but  quick- 
er and  better  ser- 
vice is  rendered. 

Merchandise     by 
Express. 

When  ordering 
goods  to  be  de- 
livered by  express 
give  the  address 
precisely.  Coun- 
try residents  in 
particular,  often 
receive  mail  at 
one  office  and  ex- 
press at  another. 
Express  charges 
vary  according  to 
the  character  and 
weight  of  the  arti- 
cle and  the  dis- 
tance to  be  car- 
ried. As  a  rule 
the  charges  may 
be  prepaid  or  not, 
as  the  sender  pre- 
fers; but  on  long 
distances  advance 


I5f  TRANSPORTATION  OF  MAIL, 

payment  is  sometimes  required.  Express  agents  will  always  give  a 
receipt  for  the  packages  taken  into  their  charge  if  so  requested, 
and  the  possession  of  such  receipt  may  be  of  particular  value  when 
a  package  has  been  damaged,  delayed  or  lost  by  the  way.  The 
address  of  the  sender  should  always  appear  on  the  outside.  The  re- 
ceiver of  an  express  parcel  is  obliged  to  sign  a  receipt  when  he  takes  it 
from  the  express  company.  The  word  "  collect  "  written  on  the  lower 
left-hand  corner  of  a  C.  O.  D.  invoice,  indicates  that  the  expressman  is 
to  collect  from  the  receiver  of  the  parcel  not  only  its  C.  O.  D.  value 
and  express  charges,  if  not  paid  in  advance,  but  the  small  fee  which 
the  company  charges  for  carrying  the  money  back  to  the  shipper.  The 
accompanying  illustration  is  a  reduced  photo-engraving  of  a  return  C. 
O.  D.  envelope. 

Money   "by    Express. 

The  great  bulk  of  the  money,  that  is,  the  actual  coin  and  bills, 
carried  from  one  point  to  another,  except  that  carried  in  the  pockets  of 
individuals,  is  carried  by  the  express  companies.  A  leading  express 
company  carries  money  for  the  United  States  government  at  the  very 
low  rate  of  fifteen  cents  for  every  $1,000  in  greenbacks.  The  profit  is 
made  out  of  the  large  shipments.  In  1889  this  company  carried  atone 
time  $15,000,000  from  Washington  to  New  York,  in  bills  of  large 
denominations  packed  in  two  small  wooden  boxes.  The  fee  was 
$2,250  and  the  actual  expense  less  than  $25.  On  another  occasion  this 
same  company  carried  at  one  time  seven  million  dollars  in  gold  from 
Philadelphia  to  New  York.  For  this  shipment  the  express  company 
received  $3,500.  The  express  companies  do  a  great  deal  of  the  carry- 
ing trade  for  banks.  Money  may  be  sent  from  any  one  point  to  any 
other  through  the  express  companies  at  a  very  small  expense.  The 
express  agent  will  furnish  you  with  a  special  envelope  in  which  to  place 
your  bills.  When  properly  addressed  he  will  put  a  cord  through  the 
center  of  the  envelope  and  bills  and  after  tying  will  seal  the  cord  to  the 
envelope  in  such  a  way  that  a  bill  cannot  possibly  be  taken  from  the 
package  without  breaking  the  seal.  This  method  is  absolutely  safe  for 
although  the  express  company  does  not  take  a  record  of  the  amount  of 
money  which  you  enclose,  they  guarantee  the  safe  delivery  of  the 
parcel  in  the  secure  condition  in  which  you  see  it  leave  their  hands. 

Transportation    of  Mail. 

It  costs  about  fifty  millions  of  dollars  annually  to  transport  the 


MONEY,    AND   MERCHANDISE. 


«S3 


United  States  mails. 
This  sum  is  spent  simply 
for  carrying  the  mails. 
The  star  service  is  that 
which  is  let  under  con- 
tract without  reference* 
to  the  mode  of  transpor- 
tation other  than  that 
the  mails  shall  be  car- 
ried with  "celerity,  cer- 
tainty, and  security." 
It  includes  nearly  all  of 
the  inland  service  that  is 
not  performed  by  rail- 
roads, steamboats,  or 
mail  messengers.  The 
system  of  star  routes, 
starting  from  railroads 
as  bases  of  supply  and 
reaching  out  to  the  most 
remote  settlements, 
comes  nearer  to  the  peo- 
ple in  rural  communities 
than  any  other  branch  of 
mail  transportation. 
The  total  length  of  star- 
service  routes  in  1895 
amounted  to  about  260,- 
ooo  miles.  The  regula- 
tion wagon  service  pro- 
vides for  the  transport- 
ing of  the  mails  in  the 
largest  cities.  The  total 
mileage  of  steamboat  ser- 
vice wholly  within  the 
United  States  is  about 
10,000.  There  are  in 
operation  nearly  3,000 
railroad  routes,  aggre- 
gating 175,000  miles  in 
ii  . 


••anssi  jo,i»*io«»iv 

A8C3J.VQ  ONV  OJNeiSHIiNaOO  SSSIND  OHViMON SIH30UOSIHJ. 


TRANSPORTATION    OF   MAIL, 


length.  The  government  pays  $42.75  per  annum  for  carrying 
200  pounds  of  mail  daily  per  mile  of  route.  For  500  pounds  $64.12 
is  paid,  for  1,000  pounds,  $85.50,  and  so  on.  Land  grant  railroads 


-pn 

^       ^      / 

SERIES  5-                                             ^                ~~  *r                                               f-                                                        m 

-X^~~^te-                       V'     e 

X.  ^p  J?J  .            ^^f  . 

^eJte'l  PITED  oT4TEs          n 

otuvtuic},     •     jjgED^Il^ 

IF  JN  TE«  DAYS  "*           TC^S)»L- 

receive  20  per  cent,   less  than  these  rates.     The  electric  car  is  becom- 
ing each  year  a  more  important  factor    in  mail  transportation.      The 


seaport  offices  maintained  on  several  of  the  fastest  ocean  steamers, 
are  a  valuable  and  indispensable  feature  of  foreign  mail  transportation. 
Under  the  existing  regulations  of  the  universal  postal  union,  an 


MONEY,    AND    MERCHANDISE. 


'55 


ordinary  letter  may  now  customarily  go,  at  an  expense  of  only  five 
cents,  to  almost  any  place  in  the  civilized  world,  carried  there  by  the 
most  rapid  means  of  conveyance,  its  privacy  uninvaded,  its  safety 
zealously  cared  for,  and  its  delivery  into  the  hands  of  him  for  whom  it 
is  intended,  practically  guaranteed.  It  may  traverse  country  after 
country  in  its  journey,  and  may,  as  a  rule,  exact  the  fullest  accessory 
service  from  the  government  of  each  in  hastening  it  to  its  destination, 
without  other  cost  than  that  comprehended  in  the  little  postage  stamp 
affixed  to  it  by  the  sender  when  he  starts  it  on  its  travels.  Moreover, 
every  nation  included  in  the  postal  union  is  obligated  to  receive  and 


»     "«"*    _JL_'  **:.—  1 

R      77 

?  "Bandino  (BM«OnKp?fili 


X 


xx 


48907 

9 


safely  carry  to  Us  own  boundary,  in  bulk,  all  mails,  however  great, 
sent  to  it  for  transmission  to  countries  beyond,  at  charges  plainly  laid 
down,  and  under  conditions  admitting  of  ready  international  settle- 
ment. One  of  the  main  instrumentalities  by  which  this  almost  ideal 
condition  of  things  has  been  brought  about  is  the  assembling,  once 
every  five  years,  of  what  is  known  as  the  "  Universal  Postal  Congress," 
made  up  of  representatives  of  nearly  all  the  nations  of  the  world,  by 
whom  are  discussed  all  defects,  if  any,  of  system  or  service,  by  whose 
votes  all  practicable  improvements  are  inaugurated,  and  in  whose  de- 
liberations such  a  spirit  of  fraternity  usually  prevails  that  self-seeking  is 


TRANSPORTATION  ~OF  MAIL, 


almost  unheard  of.  Every  one  has  at  some  time  or  another  received  a 
letter  which  through  an  error  in  the  address  or  for  some  other  cause  went 
to  the  wrong  post-office  or  to  some  other  person.  The  effort  made  by 


No.  370  Cooper  St, 
OTTAWA.  OHT. 


the  post-office  department  to  find  the  right  person  is  usually  shown  by 
the  number  of  suggested  addresses  prefixed  by  "  Try  "  which  appear  on 


the  face.  We  take  the  liberty  of  reproducing  by  photo -engraving  on  a 
preceding  page,  a  copy  of  the  envelope  of  such  a  letter.  It  was  origin- 
ally sent  from  a  point  in  the  United  States  to  a  European  address.  The 


MONEY,    AND   MERCHANDISE. 


157 


effort  made  by  foreign  post  office  officials  to  find  the  owner  is  clearly 
outlined  in  the  abundant  stamping  and  writing  which  can  be  seen  on 
the  front  and  back  of  the  envelope. 

Money    by    Registered    Mail. 

Every  country  in  the  postal  union  has  a  registered  mail  service.  Our 
illustrations  show  photo-copies  of  registered  letters  from  British 
Honduras,  the  island  of  Cyprus,  Canada,  Italy,  and  other  places.  It 
is  interesting  to  note  the  peculiar  stamping  of  these  letters  showing  the 


R 

St-Eustatius. 

(CURASAO.) 

Sto  /0 

~--?'  it  A 


%*AV 

\ 

^TTA^r 


records  taken  of  them  and  the  care  with  which  they  are  handled.  In 
many  countries  a  special  heavy  linen  envelope  is  used  and  special  care 
is  taken  in  sealing.  In  this  country  money  or  other  valuables  may  be 
sent  by  registered  mail  from  any  post  office  in  the  country.  Besides  the 
address,  the  letter  or  parcel  to  be  registered  must  have  the  name  and 
address  of  the  sender  plainly  written  or  printed  upon  it.  The  registra- 
tion fee  is  eight  cents  in  addition  to  the  regular  postage.  The  sender 
receives  a  receipt  from  the  postmaster  but  if  his  letter  is  lost  he  has  no 
redress.  A  special  effort  will  be  made  by  the  post  office  department  to 
find  the  thief  but  under  no  circumstances  will  the  loss  be  made  good. 


TRANSPORTATION  OF  MAIL, 


For  this  reason  it  is  safer  to  send  money  by  express  than  by  mail,  for 
the  number  of  registered  packages  stolen  yearly  is  quite  large  although 
small  in  comparison  with  the  large  number  handled.  In  the  United 
States  thousands  of  dollars  are  sent  daily  through  the  mails  in  small 
amounts  in  unregistered  letters.  This  cannot  be  said  of  the  mail  of 
foreign  countries  where  the  people  are  not  accustomed  to  take  the  risks 
wnlch  are  e very-day  matters  with  our  people. 

Other   Methods   of  Sending    Money, 

There  are  several  comparatively  safe  methods  of  sending  money  from 
one  point  to  another*.  Checks  and  bank  drafts  are  most  common. 
The  post  office  department  provides  money  orders  for  sums  not  exceeding 


$100  at  a  very  small  expense  depending  upon  the  amount  of  the  order. 
These  orders  are  simply  drafts  by  a  postmaster  at  one  place  on  a  post- 
master at  another,  asking  him  to  pay  a  particular  person  the  sum 
named  in  the  order.  The  actual  money  is  not  transmitted.  The  order, 
which  you  enclose  in  your  letter,  contains  the  name  of  the  person  to 
whom  the  money  is  to  be  paid,  but  not  the  name  of  the  sender.  The 
postmaster  issuing  the  order  sends  to  the  postmaster  upon  whom  the 
order  is  drawn  a  blank  advising  him  of  the  particulars  of  the  order,  its 
number,  and  the  name  of  the  person  who  bought  it.  The  postmaster 
on  whom  the  order  is  drawn  will  not  pay  the  order  until  he  has  received 
the  advice^  and  until  he  has  satisfied  himself  as  to  the  identity  of  the 


MONEY,    AND    MERCHANDISE. 


person  to  whom  the  money  is  to  be  paid.  To  obtain  a  money  order  it 
is  necessary  to  fill  out  a  printed  blank  provided  for  the  purpose  at  the 
post  office.  In  filling  out  this  blank  be  careful  to  write  the  names 
asked  for  correctly.  When  paying  a  money  order  the  postmaster  asks 
the  person  receiving  the  money  to  receipt  the  order.  A  post  office 
money  order  may  be  transferred  by  endorsement,  but  only  once.  A 
blank  form  is  printed  on  the  back.  In  case  of  the  loss  of  a  money 
c  rder  a  duplicate  will  be  issued  if  application  is  made  to  either  the 
:s.siiing  or  the  paying  postmaster.  The  duplicate  will  be  issued  by  the 
department  at  Washington  and  forwarded  to  the  person  making  appli- 
cation. All  the  leading  express  companies  issue  express  money  orders 
payable  at  any  of  the  larger  offices  of  these  companies.  They  are 
negotiable  anywhere  and  banking 
institutions  take  them  on  deposit 
as  they  do  checks  and  bank 
drafts.  Any  person  can  buy  an 
express  money  order  by  simply 
paying  the  amount  of  the  order 
and  the  small  fee  to  the  express 
agent.  It  is  necessary  sometimes 
to  send  money  by  telegraph.  This 
is  more  expensive  than  other 


PACKAGE 


Under  10lbs.  -  5cts 
tOto25lbs.  V  10cts. 
Qv$rJ2&  to  50  Ibfc.  1 5  cts. 

*.l*bilit/ limited  *oTi 


methods.  Only  the  larger  tele- 
graph offices  are  money  order 
offices.  The  rate  is  one  per  cent,  of  the  amount  of  the  order  plus 
double  the  tolls  on  a  single  message  of  fifteen  words  between  the  transfer 
places. 

Parcel   Delivery. 

The  delivery  of  parcels  has  come  to  be  quite  an  important  business 
in  large  cities.  There  are  private  companies  who  deliver  parcels  and 
and  messages  to  any  part  of  the  city  for  a  small  consideration,  usually 
five  or  ten  cents  according  to  the  size  of  the  parcel  or  the  distance  to 
be  covered.  The  railways  in  connection  with  such  companies  carry 
parcels  into  suburban  towns.  In  this  way  by  paying  five  or  ten  cents 
additional  one  can  have  a  parcel  delivered  ten  or  twenty  miles  from  the 
point  where  it  was  purchased.  The  smaller  stores  deliver  all  their  out- 
of-town  parcels  to  the  parcel  companies.  The  accompanying  engraving 
shows  a  kind  of  delivery  stamp  in  use  in  Philadelphia.  The  use  of 
these  stamps  is  an  advantage^tp  the  merchant  for  the  reason  that  he  can 


i6o 


TRANSPORTATION  OF  MAIL, 


buy  them  as  he  would  postage.  They  are  also  of  great  convenience  to 
the  delivery  company.  The  larger  business  houses  deliver  daily  by 
wagons  within  certain  distances,  and  to  points  ten  or  twelve  miles  dis- 
tant on  certain  days.  The  accompanying  illustration  is  a  copy  of  a 
delivery  tag  from  a  parcel  delivered  from  John  Wanamaker's  immense 
establishment.  With  from  five  to  ten  thousand  salesmen  and  women 
and  from  fifty  to  one  hundred  thousand  customers  daily  the  system  of 
packing,  checking,  and  delivery  with  rarely  a  blunder  must  be  almost 
perfect.  The  time  may  not  be  far  distant  when  parcels  as  well  as  mail 


will  be  shot  through  tubes  at  lightning  speed,  when  we  can  telephone 
ten  miles  for  our  breakfast  steak  and  in  five  minutes  have  it  drop  from 
a  tube  to  our  kitchen  table. 


Transportation    by    Water. 

By  the  provisions  of  the  United  States  Constitution  the  Federal 
courts  have  jurisdiction  of  questions  involving  maritime  matters  and 
shipping  interests  generally.  A  ship  is  personal  property  and  when 
sold,  a  bill  of  sale  should  be  recorded  in  the  custom  house  of  the  port 
where  the  ship  is  registered  or  enrolled.  The  captain  or  master  of  a 
ship  in  serious  distress  and  without  opportunity  to  communicate  with 
the  owners  of  the  cargo  can  mortgage  the  cargo  no  matter  to  whom  it 
belongs,  or  he  can  throw  the  cargo  overboard  to  save  the  vessel  or  its 
passengers.  The  captain  of  a  vessel  must,  within  a  certain  number  of 
hours  after  arrival  at  any  port  and  before  "  bulk  is  broken,"  deliver  to 
the  customs  officer  the  ship's  report  or  manifest.  This  is  a  declaration 
of  her  cargo  and  the  stores  existing  on  board,  the  whole  drawn  up  in  a 


,    AND   MERCHANDISE.  l6l 


prescribed  form,  and  signed  by  the  captain.  The  captain  of  a  ship 
preparing  to  sail  must  have  her  entered  outwards  at  the  custom  house 
before  taking  any  cargo  on  board.  When  the  cargo  is  completed,  the 
captain  is  delivered  a  manifest  of  the  goods  shipped,  and,  upon  ap- 
proval, the  vessel  is  cleared  outwards.  The  regulations  as  to  transpor- 
tation, bills  of  lading,  etc.,  are  similar  to  those  applying  to  railways 
and  other  common  carriers.  When  two  vessels  are  approaching  each 
other,  the  one  going  free  must  give  way  to  the  one  close-hauled.  If 
they  are  both  free  or  close-hauled,  each  must  go  to  the  right.  Sailing 
vessels  need  not  change  their  course,  as  they  have  the  right  of  way  over 
steamers.  The  captain  of  a  ship  has  absolute  control  of  the  crew  and 
the  passengers.  Outgoing  vessels  must  have  on  board  shipping  articles 
which  describe  the  voyage  for  which  the  sailors  ship,  and  the  terms  on 
which  they  ship.  These  must  be  signed  by  each  sailor  on  penalty  of  a 
fine.  A  ship  coming  into  port  is  obliged  to  take  the  first  pilot  that 
offers.  The  captain  is  not  responsible  while  the  pilot  is  in  charge. 

Salvage. 

By  salvage  is  meant  the  compensation  which  is  given  to  persons  or 
vessels  that  voluntarily  assist  in  saving  either  ship  or  cargo,  wrecked,  or 
in  danger  of  being  wrecked.  The  amount  of  salvage  to  be  given  is 
fixed  in  each  instance  by  the  United  States  Court,  and  sometimes  is 
very  large. 

Dunnage. 

It  is  usually  the  duty  of  the  first  mate  to  attend  to  the  dunnaging, 
chocking,  and  securing  of  the  cargo.  By  dunnage  is  meant  the  wood- 
packing  placed  between  the  cargo  and  the  sides  and  bottom  of  the  ship. 

Log-book. 

Ships  are  required  by  law  to  keep  what  is  known  as  log-books  in 
which  are  written  a  full  account  of  the  voyage,  the  daily  locations  of 
latitude  and  longitude,  and  the  names  and  addresses  of  passengers  and 
crew. 

Entering    Port. 

Vessels  entering  American  ports  are  boarded  by  custom  house  offi- 
cials who  examine  the  cargo  and  superintend  its  delivery.  Inspectors 
may  board  vessels,  not  only  in  port,  but  within  four  leagues  of  the 
coast,  if  bound  inland,  for  the  purpose  of  demanding  manifests  and  of 
examining  and  searching  the  vessels-, 


l62  TRANSPORTATION    OF   MAIL, 


Quarantine. 

The  quarantine  regulations  of  United  States  ports  are  very  exact- 
ing. These  come  under  the  control  of  state  Boards  of  Health  and 
differ  somewhat  in  different  ports.  The  quarantine  station  is  usually 
located  outside  the  harbor  and  vessels  cannot  enter  until  they  get  a  cer- 
tificate of  health  from  the  quarantine  officer.  The  captain  is  obliged 
under  penalty  to  furnish  the  health  officer  with  complete  and  correct 
information  regarding  the  sanitary  condition  of  his  vessel.  No  vessel 
from  a  foreign  port  must  attempt  to  approach  a  port  of  entry  until  the 
health  officer  has  granted  his  permit,  nor  can  any  person  leave  the 
vessel  which  has  not  been  visited  by  such  officer,  without  permission. 
Where  no  contagious  disease  is  found  to  exist  on  board,  and  where  the 
vessel  does  not  come  from  an  infected  place,  a  certificate  will  be 
promptly  given,  and  the  vessel  permitted  to  proceed. 

Wharfage. 

It  is  lawful  and  customary  to  charge  and  receive  wharfage  or  dock- 
age, from  every  vessel  that  makes  fast  to  any  pier,  wharf,  or  bulkhead. 
Local  regulations  differ,  and  some  cities  grant  free  wharfage  to  encour- 
age shipping. 

Clearance    at    Consulate. 

Having  cleared  at  the  custom  house,  the  captain  of  a  foreign  vessel 
is  then  required  to  clear  at  the  Consulate  of  his  country.  For  this  pur- 
pose he  must  produce  to  the  Consul  his  certificate  of  clearance  from  the 
customs,  as,  until  the  production  by  him  of  this  certificate,  the  Consul 
is  not  permitted  to  part  with  the  certificate  of  registry  which  was  lodged 
with  him  upon  the  ship's  arrival  and  which  the  vessel  cannot  enter  an- 
other port  without.  It  is  customary  for  the  Consul  to  attach  to  the 
custom  house  clearance  a  certificate  of  his  own,  signed  with  his  official 
signature,  and  bearing  the  seal  of  the  Consulate,  setting  forth  that  the 
vessel  has  been  entered  and  cleared  according  to  law. 


EXAMINATION  QUESTIONS. 

1.  Give  some  account  of  the  early  methods  of  transportation. 

2.  Enumerate  some  of  the  advantages  to  civilization  of  the  mod- 
ern facilities  for  speedy  and  safe  transportation. 

3.  "  On  the  whole,  cheapened  transportation  is  more  uniformly  beneficial  to 
the  consumer;  its  temporary  advantage  to  the  producer  very  often  leads  to  overpro- 
duction." 

Discuss  this  statement. 

4.  Which  should  have  the  strongest  influence  in  determining  the 
Business  to  be  carried  on  in  a  particular  place,  i.  the  location  of  the 
place,  2.  its  natural  advantages  independent  of  its  location  ? 

5.  Give  reasons  for  the  rapid  growth  of  large  cities  at  the  expense 
of  smaller  places. 

6.  Can   you  give  any  good   reason  for  the  fact  that  transportation 
rates  are  lower  in  Europe  than  in  America? 

7«  Enumerate  some  of  the  abuses  of  rate  discrimination  in  the 
United  States  and  tell  how  they  are  met. 

8.  What  are  the  advantages  to  the  public  of  the  freight  organiza- 
tions which  arrange  for  through  service? 

9»  In  a  legal  sense  what  is  meant  by  a  common  carrier  ? 

10.  A  stage   runs  daily  from  A  to  B.     Mr.  Brown  wishes  to  ride 
from  A  to  B  but  the  driver  refuses  to  carry  him.     Is  the  stage  company 
liable  ? 

11.  What  is  a  bill  of  lading?     How  does  it  differ  from  a  shipper's 
receipt?     Is  a  shipper's  receipt  negotiable? 

12.  What  is  a  way-bill? 

13.  Who  are  the  three  parties  to  a  bill  of  lading? 

14.  Is  the  transportation  company  obliged  to  know  the  contents  of 
the  cases  shipped  ?     If  not,  how  are  they  classified  under  first,  second, 
or  third  class  freight  ? 

15*  When  a  merchant  is  unable  to  insert  the  name  of  the  con- 
signee at  the  time  the  bill  of  lading  is  made  out,  how  does  he  draw  up 
the  bill  ?  Who  is  the  consignee  ? 


164  TRANSPORTATION   OF   MAIL, 


16.  What  are  the  advantages  to  the  shipper  of  the  bill-to-order 

system  ? 

17*  Freight  is  shipped  from  A  through  B  a  junction  point  to  C. 
From  A  to  B  it  is  carried  over  one  road  and  from  B  to  C  over  another. 
Explain  fully  the  method  of  adjusting  the  freight  between  the  two 
roads. 

18.  Explain  in  detail  the  methods  adopted  by  leading  and  compet- 
ing railway  lines  to  regulate  and  adjust  freight  rates. 

19^  How  is  freight  classified  ?  Why  does  it  cost  less  to  bring  a 
ton  of  wheat  from  Minneapolis  to  New  York  than  a  ton  of  paper? 

20.  Why  was  the  Interstate  Commerce  Act  passed  ?     Enumerate 
the  chief  abuses  corrected  by  it. 

21.  Explain    fully   the   application    of   the   term   differential  to 
freight  regulations.     Name  a  differential  line  between  New  York  and 
Chicago.     Name  the  three  standard  lines  between  New  York  and  Chi- 
cago. 

22.  How  are  (i)  through,  (2)  local  passenger  rates  regulated  ? 

23.  Explain  the  use  of  mileage  book  tickets. 

24.  What  is  meant  by  a  stop-off  privilege? 

25.  What  are  ticket-scalpers  ?  Where  do  they  secure  their  tickets  ? 

26.  Enumerate  the  chief  things  to  be  considered  by  a  transporta- 
tion company  in  making  a  schedule  of  freight  rates. 

27.  Freight  is  consigned  to  A  in  care  of  B.     Under  what  condi- 
tions can  A  secure  the  freight  ? 

28.  In  the  annual   statement  of  a  railway  company  the  following 
items    appear:      Cost    of  Equipment;     Deficit    of    Previous    Year; 
Dividends    Unpaid;     Franchise;     Sinking   Fund;     Capital    Stock. 
Which  are  resources  and  which  liabilities? 

29.  Give  in  detail  the  leading  officers  of  a  railway  company  and  an 
outline  of  the  duties  of  each. 

3<>.  How  is  passengers'  baggage  transported  from  one  point  to  an- 
other? When  is  it  necessary  to  pay  extra  baggage  ?  What  weight  of 
baggage  is  allowed  ?  If  a  trunk  is  lost  through  the  carelessness  of  the 
company  what  amount  of  damages  can  be  collected  ? 

3*«  Tell  something  about  the  business  of  the  transfer  companies. 


MONEY,    AND   MERCHANDISE. 


32.  How  long  may  baggage  remain  at  a  depot  before  storage  is 
charged  ? 

33.  A  traveler  buys  a  ticket  in  Albany,  N.  Y.,  forGuelph,Ont. 
He  finds  that  his  baggage  is  checked  only  to  Niagara  Falls.     Explain 
the  reason  for  this. 

34  .  "  It  costs  more  to  deliver  the  bread  by  wagon  to  the  consumer  than  to 
carry  the  flour  from  which  it  is  made,  2,000  miles." 

Account  for  the  truth  of  this  statement. 

35.  Name  the  leading  express  companies  of  the  United  States. 

36.  Compare  mail,  express,  and  freight  transportation. 

37.  Give  some  particulars  of  the  C.  O.  D.  express  business.  What 
is  the  significance  of  the  word  collect  written  on  the  lower  left-hand 
corner  of  a  C.  O.  D.  invoice  ? 

38.  What  methods  have  been  adopted  by  the  express  companies 
for  the  safe  transportation  of  money  from  one  point  to  another? 

3p.  About  how  much  does  it  cost  annually  to  transport  the  U.  S. 

Mails? 

40.  What  is  meant  by  the  star  service  in  mail  transportation  ? 

41*  Give  some  particulars  of  mail  service  under 

1.  The  registry  system. 

2.  The  special  delivery  system. 

3.  The  money  order  system. 

42.  The  government  pays  $42.75  per  annum  for  carrying  200 
pounds  of  mail  daily  per  mile  of  route.  A  certain  railway  carries  an 
average  of  855  pounds  of  mail  daily  for  the  months  of  June,  July,  and 
August.  How  much  should  be  received  for  the  service? 

43-  What  is  meant  by  the  Universal  Postal  Union  ? 

44  •  Describe  in  detail  the  several  common  methods  of  sending 
money  from  one  point  to  another. 

45  •  A  telegraphic  message  from  A  to  B  costs  40  cents  for  ten 
words  and  3  cents  for  each  additional  word.     What  will  it  cost  to  wire 
$250  from  A  to  B  ? 

46.  Give  some  particulars  of  the  parcel  delivery  systems  of  our 
large  cities. 

47.  A   merchant  sends  $1,000  worth  of  goods   from   A  to  B  by 


166  TRANSPORTATION   OF   MAIL,    MONEY,    AND    MERCHANDISE. 


steamer  and  another  $1,000  worth  from  A  to  B  by  rail.  The  steamer 
becomes  disabled  and  the  merchant's  goods  are  thrown  overboard. 
The  train  is  wrecked  and  the  goods  are  totally  destroyed.  Has  th« 
merchant  equal  claims  against  the  transportation  companies? 

48.  What  is  meant  by 

1.  Breaking  bulk? 

2.  The  ship's  manifest  ? 

3.  Clearing  outwards  ? 

4.  Close-hauled? 

5.  Shipping  articles  ? 

6.  Dunnage  ? 

7.  The  log-book  ? 

8.  Salvage? 

9.  Wharfage? 

10.  Certificate  of  registry  ? 

4p.  Why  and  under  what  authority  are  vessels  from  foreign  ports 
detained  at  quarantine  upon  arrival  at  New  York  or  «^.h?r  seaport 
cities  ? 

50.  Give  in  detail  the  official  duties  of  a  captain  (i)  ur*cn  enter- 
ing port,  (2)  when  about  to  clear. 

51.  "The  question  of  the  demoralization  of  railway  rates  is  as  important  as 
the  tariff  or  the  currency  question,  and  is  worthy  of  Presidential  proclamation.    The 
transportation  rate  fixes  the  price  of  every  commodity,  whether  raw  material  or 
manufactured.     Therefore,  rates  by  all  lines  from  all  points  similarly  situated  to  all 
places  similarly  situated  should  be  the  same,  and  should  be  as  well  known  to  the 
public  as  the  postage  upon  a  letter.     Then  no  advantage  could  be  secured  by  the 
rich  shipper  or  the  great  trust  over  the  enterprising  neighbor  who  has  less  capital 
but  equal  ability." — Chauncey  M.  Depew. 

Show  how  the  transportation  rate  fixes  the  price  of  commod- 
ities, and  discuss  fully  Mr.  Depew's  statement. 

52.  Would  the  Mississippi  River  serve  larger  transportation  inter- 
ests if  its  course  were  east  and  west  instead  of  north  and  south? 

53.  Locate  the  following  canals  and  give  some  particulars  of  their 
advantages  to  commerce:     Kiel;  Suez;  "Soo;  "  and  Manchester. 


INSURANCE 


Life,  Fire,  Marine,  and  Indemnity  Insurance. 


Antiquity    of  Insurance. 

We  find  some  evidence  of  the  existence  of  insurance  associations  as 
far  back  as  the  Punic  Wars  between  Rome  and  Carthage  when  the 
government  of  Rome  guaranteed  the  transportation  concerns  against 
loss  by  storm  or  the  enemy.  Spain  and  Portugal  dispute  the  real 
credit  of  having  invented  insurance  as  a  practical  business.  About  the 
beginning  of  the  fifteenth  century  marine  insurance  was  pretty  gen- 
erally understood  and  made  use  of  by  the  great  maritime  concerns  of 
Spain  and  Portugal.  Following  marine  insurance  which  was  soon 
adopted  by  other  nations,  came  life  insurance  against  which  there  was 
a  strong  prejudice  from  the  beginning.  It  seemed  to  be  setting  a 
premium  upon  murder  to  insure  a  man's  life,  and  society  was  in 
altogether  too  lawless  a  condition  four  hundred  years  ago  to  make  it 
judicious  to  offer  any  inducements  for  life  destruction.  Some  of  the 
largest  insurance  associations  of  Great  Britain  have  a  history  of  nearly 
two  hundred  years. 

Principles    of   Insurance. 

It  is  the  purpose  of  the  state  and  of  good  government  to  aid  and 
protect  its  citizens,  but  there  are  all  kinds  of  losses,  accidents,  storms, 
panics,  etc.,  which  it  is  impossible  for  even  the  best  governed  state  to 
protect  its  people  against.  These  losses  and  accidents  cannot  be 
wholly  prevented  and  the  many  must  bear  the  burden  of  the  few  and 
that  the  many  may  do  this  in  a  legal  and  business-like  way,  the  various 


1 68  LIFE,    FIRE,    MARINE^ 


forms  of  insurance  have  been  instituted.  A  loss  which  is  distributed 
among  many  is  scarcely  felt  by  each  individual.  The  majority  of 
families  are  not  so  well  provided  with  means  that  they  can  endure 
without  financial  suffering  the  loss  by  fire  or  shipwreck  of  their  prop- 
erty, or  by  death  of  the  head  of  the  household.  Statistics  play  an  im- 
portant part  in  insurance  estimates.  The  insurance  association  can 
estimate  from  years  of  careful  records,  almost  absolutely,  as  to  how 
large  their  losses  will  be  in  any  given  year. 

Systems    of   Insurance* 

In  modern  times  the  forms  and  systems  of  insurance  have  multi- 
plied greatly.  There  are,  however,  two  general  divisions,  namely,  the 
mutual,  and  the  industrial.  In  mutual  insurance  every  policy  holder 
is  a  member  of  the  association.  In  the  industrial  system  the  insurance 
company  is  a  stock-company  and  for  certain  premiums  it  insures  those 
who  have  no  connection  whatever  with  the  concern  as  a  corporation. 
The  mutual  insurance  system  needs  no  capital  stock.  The  means  of 
repairing  losses  comes  exclusively  from  the  contributions,  or  pre- 
miums, of  its  members.  The  various  labor  and  benevolent  organiza- 
tions have  systems  of  mutual  insurance.  In  case  of  death  every  mem- 
ber is  liable  to  an  assessment  which  varies  in  amount.  If  the  assess- 
ment is  not  paid  the  policy  is  forfeited.  The  larger  mutual  companies 
have  fixed  premiums  payable  at  stated  intervals  and  in  their  management, 
they  are  similar  to  the  industrial  companies.  In  the  larger  mutual 
companies  the  yearly  surplus — that  is,  the  receipts  from  fixed  premiums, 
over  and  above,  the  loss  claims  and  expenses — is  either  added  to  a 
reserve  fund,  or  is  treated  as  a  profit  and  is  deducted  proportionately 
from  the  next  annual  premiums  of  the  various  members.  In  the  in- 
dustrial system  the  premium  is  a  fixed  sum,  by  the  payment  of  which 
the  insured  party  secures  the  right  of  complete  restitution  under  all 
circumstances,  and  nothing  more.  If  the  premiums  amount  to  more 
than  the  losses,  the  surplus  belongs  to  the  company  and  not  to  the 
policy  holders.  If  the  premiums  are  less  than  the  actual  loss,  the 
company  must  meet  the  loss.  It  makes  no  difference  to  the  insured 
whether  there  are  many  or  few  accidents,  whether  the  damage  done  is 
great  or  small.  There  are  now  insurance  companies  covering  all  kinds  of 
risks — from  death,  accident,  fire,  flood,  hail,  breakage,  embezzlement,  etc. 

Fire    Insurance, 

Fire  insurance  covers  those  losses  of  property  which  occur  through 
the  destructive  agencies  of  fire.  In  the  valuation  of  buildings  the  cost 


AND   INDEMNITY   INSURANCE. 


THE  GIRARD   FIRE  AND/MARINE  INSURANCE  COMPANY, 



in  consideration  of  a  deposit  - TDolIars, 

and  thf  '.tiputatioos  herein   named  doei  hereby  agree  to  in«l*-fr^ 


.any  shall  not  be  liable  beyond  ihe  interest  of  the  assured  in  the  j^ropertv  or  beyond  the  actual  cash  v 
t;,,,  t;me  atn.  ;  .-  ,.^-  ,l!A\)  hr  asortaiiHjd  or  wtimatfd  acct>rtliag  to  such  acntd  cash  valur,  with  proper 

<l«Iu«itm  for  depreciation  however  caused  and  Ehall  in  no  event  exceed  what  it  would  dim  cost  the  insured  to  rrpair  or  replac.   : 
material  of  like  kind  and  quality  ;  said  ascertainment  or  estimate  shall  be  made  by  the  insured  and  this  o 
appraiser!!,  as  hereinafter  provided  ;  and.  the  amount  of  loss  or  damage  having  been  thus  determined,  the  sum  fur  which  this  tc-r 
jwrsuant  to  this  («,!:.:>  *  <-\vx  notice,  asceruunment,  csdmatc.  and  satisfactory  proof  of  tin 

roropany  m  accordance  with  the  tana  of  this  policy.     It  shall  lie  optional,  however,  with  this  comiMuy  to  rqak,  rebuild,  or  n-pUcc  the 
in  a  reasonable  time  on  Riviivj}  notice,  wilhin  thirty  days  »&«  the  receipt  of  the  prool  hcre'ui  r«iuired,  of 


property  destroyed  or  <lu 
its  intention  so  to  do  ;  b 


com 


ply  of  the  property  described. 


170  LIFE,    FIRE,    MARINE, 


of  rebuilding  in  the  case  of  total  destruction  is  the  basis  of  estimate. 
There  are  various  matters  which  enter  into  consideration  in  fixing  the 
insurance  rate;  such  as  the  style  of  the  building,  whether  more  or  less 
fire  proof ;  the  business  which  is  conducted  in.it;  the  condition  of  the 
building  and  its  surroundings ;  and  the  condition  of  the  local  fire 
companies  and  their  facilities  for  putting  out  fires.  Builders  are 
divided  by  an  association  of  insurers,  called  underwriters,  into  several 
different  classes,  according  to  these  circumstances,  and  the  premiums 
are  graded  accordingly.  It  is  customary  to  make  up  the  whole  amount 
of  insurance  by  distributing  it  among  several  companies.  The  losses 
are  then  settled  upon  the  average  principle.  When  a  fire  occurs  the 
insured  gives  immediate  notice  and  renders  a  sworn  statement  of  his 
losses.  The  insurance  company  usually  reserves  the  right  to  take  the 
whole  or  any  part  of  the  damaged  property.  Cash  or  its  equivalent  in 
securities  or  books  of  accounts  cannot  be  insured.  The  only  safe  place 
for  these  is  fire-proof  vaults.  The  average  clause  referred  to  reads  as 
follows : 

"  This  company  shall  be  liable  only  for  such  rateable  proportion  of  the  loss  or 
damage  happening  to  the  subject  insured,  as  the  amount  insured  by  this  company 
shall  bear  to  the  whole  amount  insured  thereon,  without  reference  to  the  dates  of 
the  different  policies,  or  the  solvency  of  the  underwriters ;  and  the  amount  to  be 
paid  shall  not  in  the  aggregate  exceed  the  amount  insured  by  this  policy." 

A  building  worth  $100,000  is  insured  with  A,  for  $40,000,  with  B, 
for  $20,000,  and  with  C,  for  $30,000.  Two  days  after  the  policy  with 
B.  expires,  a  fire  occurs,  damaging  the  building  to  the  extent  of  $50,- 
ooo.  Nothing  can  be  collected  from  B.  The  building  was  insured 
for  nine-tenths  of  its  value,  and  had  the  policy  with  B  not  expired, 
$45,000  could  have  been  collected.  Of  this  sum  A  would  have  paid 
$20,000,  B,  $10,000,  and  C,  $15,000.  As  it  stands,  the  owner's 
actual  loss  will  be  $15,000." 

Marine    Insurance. 

This  insures  against  the  accidents  which  may  happen  to  a  ship,  or 
against  the  loss  or  damage  of  its  cargo.  There  are  companies  of  un- 
derwriters in  London,  New  York,  and  other  cities  who  keep  experts  in 
large  seaboard  cities  throughout  the  world,  whose  business  it  is  to  in- 
vestigate every  ship  coming  in  as  to  condition  and  seaworthiness.  On 
the  basis  of  the  information  received  from  these  experts  all  ships  are 
classified  yearly,  and  this  information  is  open  to  marine  insurance 
companies  the  world  over.  It  is  a  sort  of  marine  mercantile  agency. 


AND    INDEMNITY   INSURANCE. 


1  71 


-^.        sss^ 

W,?®!**-  c"r>/      This  Policy  ol'  Iiisiiiv»iic(>\VUucss<%Ui,Tluil 

£  JJitf  ttpjtvr  (Ciuttjwn  tj  nl  |!ftM^W^W!k 

By  these  Presents. 


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Tob«c«o.  TobAoco  otemv  Brawl.  lnd>»n  Mc«l.  M»:uof  »Dd  CBMIA  (ucrpt 
,  n.n  or  bulk,  P,r>p»  U.  b«l  or  bull.  RI»  Sut".  Flu.  ud  Ult>lra, 


"jntriftuM  wfrmrf     The  Delaware  In.nrance  Company  •TMMM|pMi*fU  «•«•*••••»•«< 


oriftiui  »6«"«f.-  Thc  Delaware  Insurance  Company  of  PI 

u»..^a^r,/«^fiate.gf^-a,  *...-t^Ctift«A**^Vs/....<~« 


LIFE,    FIRE,    MARINE, 


The  amount  of  insurance  on  a  cargo  is  measured  by  the  invoice  value  of 
the  commodities,  plus  the  costs  of  transportation  to  the  place  of  destina- 
tion, plus  the  insurance  premium.  The  insurer  of  the  cargo  is  not 


LA11K-. 


lioiw  and  Siipiiiulioio  iiuulc  in  the  7>pp!i«ulkw  for  I  lib  Volicy 


usually  liable  for  loss  through  the  unseaworthy  condition  of  trie  vessel. 
Policies  on  cargoes  are  issued  for  a  certain  voyage,  or  from  port  to 
port,  and  on  vessels  for  a  specified  time  or  for  a  certain  voyage.  The 


AND   INDEMNITY    INSURANCE. 


'73 


adjustment  of  marine  losses  is  on  the  same  principle  as  the  adjustment 
of  fire  policies  containing  the  average  clause. 


life  insurance  and  other 


Life    Insurance. 

There  is  a  marked  difference  between 
kinds  of  insurance.  The  in- 
surance of  houses  and  goods 
against  fire  is  a  contract  of  in- 
demnity against  loss,  and  in 
like  manner  an  insurance  on 
human  life  may  be  considered 
as  indemnifying  a  man's  family 
or  creditors  or  others  interested 
against  the  loss  of  future  in- 
come occasioned  by  death. 
But  it  does  not  necessarily  take 
the  value  of  such  income  into 
account,  nor  does  it  relate  to 
any  intrinsic  value  of  the  sub- 
ject of  insurance,  which  is 
the  life  of  the  insured  party. 
Again,  in  fire  or  marine  insur- 
ance the  loss  may  be  only  par- 
tial, while  in  life  insurance,  the 
loss,  if  it  occurs  must  be  total. 
And  again  in  life  insurance,  the 
event  is  certain  to  occur,  and 
the  time  of  its  happening  is  the 
only  contingent  element.  A 
person  is  permitted  to  insure 
not  only  his  own  life  but  also 
that  of  another,  although  it  is 
taken  for  granted  that  he  has 
some  special  interest  in  the  life 
of  the  insured  party,  growing 
out  of  business  or  other  rela- 
tionship. The  insured  party 
may  contract  that  the  sum  insured  him  shall  be  paid  to  him  during  his  life, 
after  reaching  a  certain  age.  Life  insurance  has  many  very  important 
advantages  over  other  methods  of  saving.  It  secures  to  the  individual 
a  substitute  for  the  guarantee  of  life  which  he  can  never  have,  by  put- 


174  LIFE,    FIRE,    MARINE, 


ting  him  in  a  condition  in  which  the  advantages  connected  with  an 
average  length  of  life  are  assured  him,  and  by  fixing  his  services 
with  reference  thereto;  it  keeps  him  from  touching  the  savings  ac- 
cumulated, by  depriving  him  of  control  of  them  ;  it  prevents  him  from 
growing  negligent  in  his  economy  by  making  him  lose  all  or  part  of  what 
he  has  saved  if  he  fails  to  pay  his  premiums.  The  pecuniary  means  of 
meeting  their  obligations  are  derived  by  the  insurance  associations  from 
several  sources :  first,  from  the  annual  premiums  which  vary  according 
to  the  conditions  of  the  insurance  ;  secondly,  from  temporary  insur- 
ance, lapsed  policies,  and  from  the  income  from  judicious  investments. 
Exact  information  as  to  the  expectation  of  life  at  different  ages  is  fur- 
nished to  a  satisfatory  degree  by  statistics.  Statistical  observations  on 
the  rate  of  mortality  at  various  ages,  and  on  the  average  duration  of 
life,  are  tabulated  in  the  mortality  tables,  which,  beginning  with  a 
fixed  number  of  persons  of  the  same  age,  show  for  each  year  the  pro- 
portion of  deaths  in  that  number  and  the  expectation  of  life  of  the  sur- 
vivors. These  tables  date  back  200  years  and  the  results  vary  very  lit- 
tle. Weak  and  sickly  persons,  particularly  those  suffering  from 
chronic  diseases,  as  well  as  those  engaged  in  dangerous  occupations,  are 
very  properly  excluded  from  insurance.  The  reserve  fund  is  an  ob- 
ject of  great  importance  to  life  insurance  companies.  Those  who  take 
out  policies  for  life  or  for  a  period  of  years  continue  to  pay  the  same 
annual  premium  which  was  fixed  with  reference  to  their  age  at  begin- 
ning. They  ought  really  to  pay  a  lower  premium  at  first,  and  as  they 
grow  older,  a  higher  one.  As  a  matter  of  fact  they  pay  in  excess  of  the 
average  rate  of  mortality  and  at  advanced  age  their  premiums  are  much 
below  the  demands  of  the  advanced-age  mortality.  To  meet  this  con- 
tingency the  insurance  companies  set  aside  the  excesses  of  the  earlier 
years  as  a  reserve  fund,  as  one  of  the  necessary  conditions  of  a  con- 
tinued existence.  The  following  table  of  insurance  represents  the 
maximum  rates  of  the  leading  New  York  companies  : 


AND   INDEMNITY   INSURANCE. 


175 


LIFE  POLICIES. 

ENDOWMENT  POLICIES. 

Insurance  payable  at  death  only. 

Premiums    payable    annually 
for  10  years. 

Insurance  payable 

Premiums  payable   annually 

as  stated,  or  at  death 

for 

Single 

j  *** 

if  it  occur  earlier. 

• 

Payment. 

20 

IS 

10 

In  20 

fit   15 

In    10 

Age. 

Life. 

Age. 

years. 

years. 

years. 

years. 

years. 

years. 

25 

£19.89 

$27.39 

$32-34 

$42.56 

$326.58 

$75-39 

$87.92 

$103.91 

25 

26 

20.40 

27-93 

32-97 

43-37 

332.58 

75-54 

88.05 

104.03 

26 

27 

20.93 

28.50 

33-62 

44.22 

338.83 

75-71 

88.19 

104.16 

27 

28 

21.48 

29.09 

34-31 

45.10 

345-31 

75-89 

88.34 

104.29 

28 

29 

22.07 

29.71 

35-02 

46.02 

352.05 

76.08 

88.50 

104.43 

29 

3O 

22.70 

30.36 

35-76 

46.97 

359.05 

76.29 

88.67 

104.58 

30 

31 

23-35 

3I-03 

36-54 

47.98 

366.33 

76.52 

88.86     104.75 

31 

32 

24.05 

37-35 

49.02 

373-89 

76.76 

89.06     104.92 

32 

33 

24.78 

32.48 

38.20 

5°.  IO 

381.73 

77.02 

89.27 

105.11 

33 

34 

25.56 

33-26 

39-09 

51.22 

389.88 

77-30 

89.50 

105.31 

34 

35 

26.38 

34.08 

40.01 

52.40 

398.14 

77.62 

89.75 

I05-53 

35 

36 

27.25 

34-93 

40.98 

53-63 

407.11 

77-95 

90.02 

I05-75 

36 

37 

28.17 

35.83 

42.00 

54.91 

416.21 

78.33 

90.31 

106.00 

37 

38 

29.15 

36.78 

43.06 

56.24 

425.64 

78.73 

90.63 

106  28 

38 

39 

30.19 

37-78 

44-17 

57-63 

435-42 

79.18!  90.98 

106.58 

39 

40 

3I-30 

38.83 

45-33 

59.09 

445-55 

79.68 

91-37 

106.90 

4O 

41 

32-47 

39-93 

46.56 

60.60 

456.04 

80.23 

91.79 

107.26 

41 

42 

33-72 

41.10 

47-84 

62.19 

466.89 

80.83 

92.26 

107.65 

42 

43 

35-°5 

42.34 

49.19 

63-84 

478.11 

81.49 

92.78 

108.08 

43 

44 

36.46 

43-64 

50.61 

65-57 

489.71 

82.22 

93-34 

I08-55 

44 

45 

37-97 

45-03 

52.11 

67.37 

501.69 

83-03 

93-97 

109.07 

45 

46 

39.58 

46.50 

53.68 

69.26 

5  T  4-04 

83.93 

94-67 

109.65 

46 

47 

41.30 

48.07 

55-35 

71.25 

526.78 

84.92 

95-46 

110.30 

47 

48 

43-  *  3 

49-73 

57-1° 

73-32 

539-88 

86.02 

96.31 

III.OI 

48 

49 

45.09 

58.95 

75-49 

553-33 

87.22 

97.27 

111.81 

49 

50 

47-18 

53-38 

60.91 

77-77 

567-I3 

88.54 

98.32 

112.68 

5O 

Surplus  premiums  or  dividends  are  returned  annually  commenc- 
ing at  the  payment  of  the  second  premium.  Policies  which  do  not 
share  in  the  dividends  of  the  company,  are  issued  at  a  somewhat  lower 
rate.  The  above  rates  are  for  annual  payments  only.  To  obtain  semi- 
annual payments,  add  4  per  cent,  and  divide  by  2.  To  obtain  quarterly 
payments,  add  6  per  cent,  and  divide  by  4. 

Accident    Insurance. 

Accident  insurance  does  not  date  back  more  than  fifty  years.  We 
first  find  mention  of  a  company  formed  in  London  in  1849  for  insur- 
ing against  railway  accidents.  At  present  there  are  a  great  many  com- 
panies representing  much  capital  which  insure  against  all  kinds  of  acci- 


i76 


LIFE,    FIRE,    MARINE, 


IP 

...  y  K^  o 


m 

IS! 
B*M 


at 


dents  for  any  length  of 
time  from  one  day  to  ten 
years.  One  can  buy  at 
any  railway  station  for 
twenty-five  cents  an  in- 
surance policy  taking  a 
$3,000  risk  for  one  day. 

Annuity    Insurance. 

This  is  almost  the  op- 
posite to  life  insurance. 
The  simplest  form  is 
that  in  which  the  pay- 
ment of  an  annuity  is 
assured  until  death  to  a 
person  in  return  for  the 
deposit  of  a  fixed  amount 
of  capital.  The  insured 
begins  to  receive  the 
annuity  at  once  or  at 
some  later  period,  usual- 
ly after  reaching  a  cer- 
tain age.  This  class  of 
insurance  is  more  popu- 
lar in  Europe  than  in 
America.  The  Ameri- 
can who  has  capital  pre- 
fers to  take  chances  for 
his  income  on  more  pro- 
ductive forms  of  invest- 
ment. 

Other     Kinds    of    In- 
surance. 

The  guarantee  of 
employers  against  the 
fraud  or  insolvency  of 
their  servants  has  be- 
come of  late  years  of 
considerable  import- 
ance. Companies  have 
been  formed  to  insure 


AND  INDEMNITY  INSURANCE. 


merchants  against  loss  by  bad  debts,  and  others  to  insure  builders  and 
contractors  against  accidents  to  their  employees.  Almost  every  conceiv- 
able kind  of  risk  is  now  covered  by  insurance  in  some  form  or  other. 


*/M 


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Insurance    Terms. 

The  written  contract  ot  insurance  with  its  various  conditions  is 
termed  the  policy.  It  contains  a  description  of  the  property  or  person 
therein  insured,  the  cost  of  the  insurance,  the  amount  of  indemnity  to 


178  LIFE,    FIRE,    MARINE, 


be  paid,  etc.  The  premium  is  the  sum  paid  by  the  insured  to  the  in- 
surer fur  the  risk  which  the  latter  assumes.  In  fire  insurance  the  pre- 
mium is  quoted  at  a  certain  rate  upon  $1,000  insurance  fur  one  year  or 
for  five  years.  An  ordinary  dwelling  in  a  good  location  would  be 
charged  from  $5  to  $7.50  per  $1,000  for  a  period  of  five  years.  Short- 
rates  are  rates  for  a  term  less  than  a  year.  The  insurance  agent  is  the 
person  who  represents  the  insurance  company.  Insurance  brokers  usu- 
ally represent  several  companies.  An  open  policy  is  one  upon  which 
additional  insurance  may  be  entered  at  different  times.  Fire  insurance 
companies  issue  open  policies  with  pass-books  attached  for  convenient 
entries  of  merchandise  in  daily  transportation.  Open  policies  covering 
all  risks  are  issued  to  importers  who  do  not  always  have  a  definite 
knowledge  of  the  time  of  shipment. 

Forms    of   Life    Insurance. 

A  straight  life  policy  is  payable  only  upon  the  death  of  the  insured 
and  premiums  must  be  continued  until  death.  A  2o-year  life  policy 
would  be  similar  to  the  straight  life  with  the  exception  that  premiums 
would  cease  after  20  years.  Endowment  policies  are  payable  at  death 
or  at  the  end  of  a  fixed  period  to  the  full  extent  of  the  amount  insured. 
Tontine  policies  entitle  the  holders  to  a  pro  rata  distribution  of  the  ex- 
cess tontine  (lapsed)  premiums  paid  during  that  period. 

Insurance    Law. 

It  is  generally  necessary  to  get  the  consent  of  the  first  company 
before  an  insurer  can  take  out  a  second  policy  elsewhere.  This  is  not 
true  of  life  insurance.  Any  person  may  insure  his  own  life  or  property 
in  favor  of  any  one  he  chooses.  A  creditor  may  insure  a  debtor's  life 
up  to  the  amount  of  the  debt.  Any  interest  in  property  gives  a  person 
possessing  such  interest  the  right  to  insure  it,  whether  he  is  the  true 
owner  or  not.  A  warranty  is-  a  statement  of  fact  made  by  the  insured 
and  contained  in  the  policy.  If  it  is  incorrect  or  untrue,  the  policy  is 
void,  and  the  insured  cannot  recover  his  loss,  though  he  has  paid  his 
premiums.  A  false  age  given  in  a  life-policy,  for  instance,  makes  it 
absolutely  void.  It  is  often  agreed  that  if  the  building  insured  ceases 
to  be  occupied  the  policy  is  to  be  considered  suspended.  It  is,  there- 
fore, unwise  to  leave  an  insured  building  vacant.  It  is  generally  neces- 
sary for  the  insured  to  take  great  care  in  connection  with  the  heating 
and  lighting  arrangements.  Extensive  alterations  in  an  insured  build- 
ing should  not  be  made  without  notifying  the  company.  It  is  often 
necessary  to  notify  the  company  if  an  insurance  policy  is  assigned  as 


AND    INDEMNITY    INSURANCE.  179 

collateral  security  for  a  debt.  The  balance  of  the  insurance  in  such  a 
case  would  go  to  the  original  owner.  There  is  generally  a  provision  in 
fire  policies  that  unless  proofs  of  loss  are  filed  in  the  office  of  the  com- 
pany within  sixty  days  after  the  fire,  the  company  will  not  be  liable. 

Lloyd's. 

The  name  Lloyd's  is  similar  in  its  significance  to  Bradstreets. 
It  is  a  society  composed  of  underwriters  and  others  interested  in  ship- 
ping. This  society  has  agents  in  all  the  seaports  of  the  world  to  report 
upon  vessels — their  arrivals,  departures,  accidents,  sea-worthiness,  etc. 
Lloyd's  originally  was  a  coffee  house  (kept  by  Edward  Lloyd)  conven- 
iently situated  for  merchants  and  shippers.  Thus  the  custom  of  meet- 
ing for  business  grew  up  there  and  more  than  200  years  ago  a  corporate 
society  was  formed.  Lloyd's  is  now  the  most  important  shipping  bu- 
reau in  the  world. 


EXAMINATION  QUESTIONS. 

1.  Give  some  account  of  the  history  and  development  of  the  in- 
surance business. 

2.  To  what  extent  is  insurance  a  compulsory  element  of  the  gov- 
ernment of  Germany  and  other  European  countries? 

3-  How  is  it  possible  for  insurance  companies,  especially  those 
doing  a  life  and  accident  business,  to  estimate  in  advance  with  any 
degree  of  accuracy  their  losses  ? 

4«  Enumerate  a  few  of  the  many  systems  of  insurance  now  in 
operation  in  this  country. 

5»  Distinugish  between  mutual 'and  industrial  companies. 

6.  Why  is  it  that  the  mutual  insurance  company  needs  no  capital 
stock?     Give  instances  of  mutual  companies. 

7.  Name  three  leading 

1.  life  insurance  companies. 

2.  fire  insurance  companies. 

3.  accident  insurance  companies. 

8.  What  is  the  surplus  fund  of  an  insurance  company  ?     How  is 
it  applied  in  mutual  companies?     How  in  industrial? 

9«  What  is  the  policy  ?    What  is  the  premium  f 

10.  The  death  rate  of  a  community  or  nation  is  doubled.     How 
will  it  affect  (i)  mutual  life  policy  holders,  (2)  industrial  life  policy 
holders? 

11.  What  is  necessary,  when  a  fire  occurs,  to  secure  the  insur- 
ance? 

12.  Quote   the  average   clause   usually  found   in   fire  insurance 
policies. 

13-  Goods  worth  $50,000  are  insured  for  $20,000  and  are  dam- 
aged by  fire  to  the  extent  of  $30,000.  Will  the  company  be  obliged 
to  pay  the  full  $20,000  ? 

14.  How  do  marine  insurance  companies  secure  ratings  as  to  the 
seaworthy  character  of  vessels  ? 

15.  Is  it  customary  to  insure  a  ship's  cargo  for  more  than  its  value? 

16.  Enumerate  some  of  the  economic  advantages  of  life  insurance. 

(180) 


LIFE,    FIRE,    MARINE,    AND   INDEMNITY   INSURANCE.  l8l 

i7«  From  what  is  the  income  and  resources  of  a  life  insurance 
company  usually  derived? 

18.  From  the  table  given  find  the  quarterly  premium  for  a  $5,000 
life  policy  payable  in  10  years  taken  at  the  age  of  48. 

19.  Distinguish  between  annuity  insurance  and  life  insurance. 

20.  What  general  name  is  given  to  insurance  company  associa- 
tions? 

21.  Distinguish  between  "  straight"  life  and  endowment  policies.' 

22.  What  is  meant  by  tontine  as  this  term  is  applied  to  life  insur- 
ance ? 

23.  A  building  is  valued  at  $400,000.     It  is  insured  in  A  for  $20,- 
ooo,  in  B  for  $30,000,  in  C  for  $40,000,  and  in  D  for  $60,000.     A 
fire  damages  the  building  to  the  extent  of  $10,000.     How  much  will 
D  be  required  to  pay?     If  the  building  were  totally  destroyed  how 
much  would  A  be  required  to  pay  ? 

24.  Stock  valued  at  $40,000  is  insured  for  $12,000.     It  is  dam- 
aged by  water  to  the  extent  of  $4,000.     Find  the  loss. 

25.  A  dry  goods  house  had  stock  on  hand  January  I,  valued  at 
$500,000.     Expect  average  profit  of   20  per  cent.     Bought  between 
January  i  and  July  I  $100,000.     Salesbook  shows  sales  of  $360,000. 
Stock   insured   January   i    for  $400,000.     Burned  July   i ;    one-half 
totally  destroyed ;  balance  damaged  fifty  per  cent.     Find  the  owner's 
loss. 

26.  The  following  items  are  taken  from  the  yearly  statement  of  a 
life  insurance  company : 

Stocks  and  Bonds,  $103,705,308.67  ;  Policy  Reserve,  $139,620,188.00;  Surplus 
due  Policy  Holders,  $20,249,307.73;  Unpaid  dividends,  $147,437,07;  Loans  on 
Policies,  $4,231,852.93;  Accrued  Interest  Receivable,  $,405,663.08;  Premiums  paid 
in  advance,  $157,415.68;  Real  Estate  Sinking  Fund,  $200,000;  Loans  on  Collat- 
erals, $579,922.00;  Premiums  due,  $5,571,397.74;  Mortgages,  $26,349,724.84; 
Real  Estate,  $14,675,478.98;  Death  Claims  due,  $1,550,382.62;  Policy  Trust  Fund, 
#87,039.83. 

Arrange  these  items  in  a  statement  showing  assets  and  liabili- 
ties which  should  balance. 

37.  How  is  the  name  Lloycfs  associated  with  marine  insurance  ? 


Importing,  Exporting,  Shipping,  and  Ware- 
housing. 


Foreign    Commerce* 

Commerce  primarily  means  the  interchange  of  property.  We, 
however,  call  local  commerce,  business,  and  the  general  term  is  ap- 
plied more  to  our  trade  with  other  nations.  Commencing  in  the 
earliest  ages,  commerce  extended  as  nations  grew  in  intelligence  and 
civilization.  It  has  vastly  increased  during  the  last  half-century. 
More  than  2,000  years  ago  the  Phoenician  and  Carthaginian  traders 
visited  England  and  carried  away  tin  from  Cornwall,  bringing  in  ex- 
change earthenware,  brass  manufactures,  and  salt.  Modern  commerce 
necessitates  the  existence  and  employment  of  numerous  classes  of 
people  and  a  vast  machinery  of  conveyance  and  communication.  The 
entire  world  is  the  field  of  the  modern  merchant.  He  buys  raw  and 
manufactured  products  wherever  he  can  buy  cheapest  and  he  ships  to 
whatever  market  pays  him  the  highest  price.  Our  corner  grocer  or 
produce  dealer  may  furnish  us  with  beef  from  Texas,  potatoes  from 
Egypt,  celery  from  Michigan,  onions  from  Jamaica,  coffee  from  Java, 
oranges  from  Spain,  and  a  hundred  other  things  from  as  many  distant 
points,  and  yet  so  complete  is  the  interlocking  of  the  world's  com- 
mercial interests  and  so  great  is  the  speed  of  transportation  that  he  can 
supply  us  with  these  necessaries  under  existing  conditions  more  easily 
and  readily  than  if  they  were  all  grown  on  an  adjoining  farm. 


184 


IMPORTING,    EXPORTING, 


Chambers    of    Commerce. 

Chambers  of  Commerce  and  Boards  of  Trade  are  voluntary  local 
institutions  whose  object  is  to  promote  the  domestic  or  foreign  trade  of 
the  cities  in  which  they  are  located.  They  collect,  classify,  and  dis- 


Jttft 


•%^i.  ^/Te^/^t;  7//^i. 

^      *    ^  -f£/fe 


y^-j^ 


9^.^  ^^  ^^  ^  ^ 

7<b^y   ^     V^5  ^^^.  ^5.  ^XOT  ^^ 


7 


tribute  information  regarding  their  city  and  its  peculiar  industries  and 
advantages.  They  co-operate  in  promoting,  opposing,  or  amending 
measures  touching  their  interests.  The  formation  of  such  associations 
is  left  entirely  to  the  private  enterprise  of  the  trading  community  of  the 


SHIPPING   AND   WAREHOUSING. 


town  or  city.  The  funds  required  to  meet  the  expenses  are  supplied  by 
regular  contributions  paid  in  by  members.  The  boards  of  "trade  of 
American  cities  have  had  a  large  influence  in  directing  the  character 
of  the  business  done  in  each,  and  many  of  our  cities  owe  their  large 


and   speedy  growth   to  the  immediate  influence  of  enterprising  and 
progressive  boards  of  trade. 

Customs   Duties. 

The  taxes  levied  upon  merchandise  imported  or  exported  are  com- 
monly called  customs  duties.    They  have  always  formed  one  of  the 


i86 


IMPORTING,    EXPORTING, 


most  important  sources  of  revenue  in  all  civilized  nations.  We  know 
that  the  Athenians  derived  a  considerable  revenue  from  their  customs. 
They  levied  a  duty  of  two  per  cent,  on  all  exports  and  imports  at 
Athens.  Under  the  name  of  portoria,  customs  duties  were  levied  at 


Rome  at  so  early  a  date  in  her  history  that  we  have  no  record  of  their 
introduction.  So  universal  did  these  duties,  local  and  national,  be- 
come, that  every  continental  nation  was  fairly  covered  with  a  net-work 


SHIPPING  AND  WAREHOUSING. 


I87 


of  customs  lines.  The  most  ancient  customs  in  England  consisted  of 
fees  paid  by  the  merchants  for  the  privilege  of  using  the  king's  ware- 
houses, weights,  and  measures.  The  excise  was  first  levied  in  Holland 


(Form  No.  13«;.) 

Declaration  to  be  made  by  the  Seller  on  behalf  of  the  Purchaser  where 
Merchandise  has  been  actually  Purchased. 

4,ea^  J 

Und.iM  solemnly  and  tny  declxfc  that  I  air- 

"in  thc/nncxp-1  invoice  mo'.tionpd  aoH  flfcsMttveH    shich 

'  tyUwP*  Jfo»V&<  6**ttU**tt4Gj&'>9     of         (St^  *tf*'a,  in  the  United  i 
that  the  saio  invoice  was  ufade  at         .sfy^  *X**~&tr~*S~~  •  1D  *•  consular  district  of  Glasgow, 

whence  the  said  Merchandise  is  \itrtx-  ^ported  to  thtfCuited  States,  and  that  it  is  ID  all  respects  true ;  that  it 
contains  n  true  and  full  statement  of  iho  lime  when,  the  place  where,  and  the  person  from  whom  the  merchandise 
therein  mentioned  was  purchased,  and  the  actual  price  paid,  or  to  be  paid,  to*  ^^^^ 

"by  the  purchaser,  to  whom'      /4ft'      nave  so'd  '^  8atno  ID  the  ordinary  course  of  ffade,><ia  for  whom  I  now 

"act  in  producing  this  iavoiprt'togeilier  with  a  true  statement  of  the  quantity  thereof,  and  of  all  charges  thereon  ; 
that  no  discounts,  bounties,  or  drawbacks  are  contained  in  the  said  invoice  but  such  as  have  been  actually  allowed 
thereon  ;  that  the  currency  m  which  the  said  invoice  is  made  out  is  the  currency  which  was  actually  paid,  or  is 
lo  bo  paid,  for  the  said  merchandise  ,  and  that  no  different  invoice  thereof  has  been  or  will  be  furnished  to  any  one. 
I  further  declare  that  it  13  inu-nfled  to  make  entry  of  the  Merchandise  mentioned  in  the  eaid  invoice  at  the 
port  of  <4i  -/9rrt*(-/fvJiyi*S"*&y£e  the  United  States  of  America. 

And  I  raalce  this/solemn  declaration,  conscientiously  believing  the. same  to  bo  true,  and  by  virtue  of  the 
provisions  of  an  Act  made  and  passed  in  the  sixth  year  of  the  reign  of  His  late  Majesty  King  William  the  Fourth, 
intituled,  ••  An  Act  to  repeal  an  Act  of  the  present  Session  of  Parliament,  intituled  an  Act  for  the  more  effectual 
Abolition  of  Oaths  and  Affirmations  taken  and  made  in  various  departments  of  llip  Stale,  and  lo  substitute 
Declarations  in  lieu  thereof,  and  for  the  more  entire  suppression  of  voluntary  and  extra-judicial  oaths  and  affidavits, 
tod  to  make  other  provisions  for  th«  abolition  of  unnecessary  oaths." 

Declared  at  GLASGOW,  in  thg  County  of 
LANARK,  SCOTLAND,  the         J /  day  of 


_Nota,y  Public. 

<Form  No.  140.) 

I,  LEVI  W.  BROWN,  Consul  of  the  United  States  at  Glasgow,  do  hereby  certify  that  at  Glasgow,  on  this 
,)/      day  of    J9£ce+*dfa    A.D..  189  Zjhe  within  Invoice,  No.  t-f  _>  •?    Tlfl  which  tre 
mentioned  and  described  cectrfm  Merchandise,  to  wit  :— 


of  £  S&f-  2  ~/0    was  produced  to  me  by 
_  writing  in  my 

entry  "of  said 
in  the  Urffted  States  of  America. 

I  do  further  certify  that  I  am  satis6ed  that  the  person  making  the  declaration  hereto  annexed  is  the  person 
he  represents  himself  'to  be,  and  that  the  price  stated  in  said  invoice  represents  the  actual  market  value  or 
of  the  Merchandise  described  in  the  said  invoice  in  the  principal  markets  of  the  country  at  the 
tion,  excepting  as  noted  by  roe  upon  said  invoice,  or  respecting  which  I  shall  make  special 
k  proper  authority. 

I  and  seal  of  Office,  at  GLASGOW  (be  day  and  year  aforesaid. 


<WJ  of  the  United  State,. 

Received  Fee. /2.50 


as  a  war  tax.  In  the  United  States  this  form  of  tax  is  called  internal 
revenue  and  is  levied  by  means  of  affixed  stamps  upon  tobacco  and 
liquor.  We  import  about  a  billion  dollars  worth  of  merchandise 
annually,  and  export  slightly  more.  The  value  of  our  in-transit  trade, 


1 88 


IMPORTING,    EXPORTING, 


United  States  Consular  Agency 
Gera.  Germany. 


Declaration  to  be  made  by  the  Seller  on  behalf  •!  the 
Purchaser  where  Merchandise  has  been  Actually  Purchased. 


_ 

do    solemn*?  taut   truly  declare  <i*  __  ^I^**~_ 
: -the  seller and  shipper 

of  the  mtrchandise   in   the   annexed  invoice  mentioned 
and  destribed^  which  wot  purchased  from     ^<^     by 


cf 

in  the  Utnittd  States  ;  that  the  said  invoice  was  made  at 


that  is,  of  foreign  merchandise  brought  to  this  country  for  immediate 
shipment  from  its  ports  or  across  the  country  to  other  foreign  countries, 
amounts  to  over  fifty  millions  of  dollars  annually.  The  term  entry  for 
consumption  is  the  technical  name  of  the  import  entry  made  at  the 

custom  house  and  does 
not  imply  that  the  goods 
are  actually  to  be  con- 
sumed, but  simply  that 
they  have  been  deliv- 
ered into  the  custody  of 
the  importer  and  that 
the  duties  have  been 
paid  on  the  dutiable 
portion.  The  values  of 
imported  articles  are 
their  values  in  the  for- 
eign markets  from  which 
they  are  imported,  or 
rather  the  foreign  ship- 
pers' invoice  value.  The 
cost  of  freight  from  the 
last  foreign  port  whence 
they  were  shipped  to  the 
United  States  is  not  in- 
cluded in  their  dutiable 
value.  The  commissions 
of  commission  men  and 
importers  are  not  de- 
ducted before  the  duty 
is  charged.  The  for- 


at  the  port  of 

tn6o«d  ^ 

in  the  United  States  of  America.  _  tlgtl       €XpOrt      ValUC 

commodities  exported 
from  a  bonded  ware- 
house is  the  value  which 
they  bore  in  the  foreign 
markets  whence  they 
were  imported  to  the  United  States,  that  is,  their  import  value.  This 
name  is  given  to  distinguish  this  class  of  exports  from  what  are 
known  as  domestic  exports,  that  is,  exports  of  produce  or  goods  grown 
or  manufactured  in  the  United  States. 


in  the  consular  district  of  GERA,  whence  the  said 
mtrehmJ&se  is  to  be  exported  to.  the  United  States, 
and  that,  it  is  in  all  respects  true;  that  it  contains 
a  true  and  full  statement  of  the  time  when,  the  place 
when,  and  the  person  from,-  whom  the  merchandise 
therein  mentioned  was  purchased,  and  the  actual  price 


Jt&d,  or  to 'be  paid,  tcf^fby  the  purchaser,  to  whom 
I/have  told  the  syMe  in  the  ordinary  course  of  trade, 
and  'for  whom  csnow  act  in  producing  this  in- 
voice, together  with  a  true  statement  of  the  quantity 
thereof,  and  of  ail  charge*  thti  eon ;  that  no  discounts, 
bounties,  or  drawbacks  are  contained  in  the  said  invoice 
but  such  as  have  been  actually  allowed  thereon;  that 
the  currency  in  which  the  said  invoice  is  made  out  is 
the  currency  which  teas  actually  paid,  or  it  to  be 
paid,  for  the  said  merchandise;  and  that  no  different 
invoice^&breof  has  been  or  will  be  furnished  to  any  one. 
(^further  declare  that  it  is  intended  to  make 
entry  of  t/ie  merchandise^rne^tiojisd  in  the  said  invoice 


SHIPPING  ANB   WAREHOUSING.  189 

How    Goods    Are    Imported. 

Large  orders  for  foreign  goods  are  sent  to  European  bouses  either 
direct  by  correspondence  or  through  New  York  commission  merchants 
who  make  a  specialty  of  import  trade.  The  largest  American  im- 
porters have  men  whom  they  call  i\\e\r  foreign  buyers.  These  go 
abroad  at  certain  seasons  and  make  purchases  direct  from  European 
/louses.  They  simply  buy  the  goods,  that  is,  order  them,  and  leave  the 
shipping  and  all  the  routine  connected  therewith  to  the  seller.  When 
the  goods  are  ready  for  shipment,  the  foreign  house  makes  out  an 
invoice — three  copies.  These  are  taken  to  the  office  of  the  nearest 
United  States  Consul  and  an  oath  is  taken  to  the  effect  that  the  par- 
ticulars and  prices  are  absolutely  as  stated.  This  precaution  is  to  pre- 
vent fraud.  A  foreign  merchant  might  be  in  collusion  with  an  Ameri- 
can importer  and  invoice  goods  at  a  value  lower  than  their  actual  price 
to  reduce  the  amount  of  duty  to  be  paid  at  the  American  port  of  entry. 
The  Consul  files  one  copy  of  the  invoice  ;  the  second  he  sends  to  the 
custom  house  where  the  goods  are  to  be  entered;  and  the  third  is  re- 
turned to  the  shipper.  The  cases  are  forwarded  to  the  seaport  town 
where  a  bill-of-lading,  also  in  triplicate,  is  issued  by  the  ship  or  her 
agents.  The  invoice,,  the  bill-of-lading,  and  the  Consul's  certificate 
are  mailed  ta  the  consignee  at  the  port  of  destination.  Upon  the 
arrival  of  the  goods  the  consignee  usually  takes  the  papers  to  his 
custom  house  broker,  who  for  a  moderate  fee  does  the  necessary 
routine  work  of  passing  the  goods  at  the  custom  house.  The  consignee 
may  save  this  expense  by  attending  to  the  matter  himself  but  usually  he 
finds  it  a  saving  of  expense  as  well  as  of  time  to  allow  a  broker  to  do 
the  work  for  him.  If  he  wishes  to  pay  the  duty  immediately  he  makes 
what  is  known  as  a  cash  entry.  If  he  does  not  require  the  goods  im- 
mediately he  may  make  a  warehouse  entry.  When  the  latter  is  done 
the  duty  need  not  be  paid  until  the  goods  are  taken  from  the  bonded 
warehouse.  The  cases  may  be  taken  in  lots  at  different  times  at  the 
convenience  of  the  importer.  In  the  entry  of  goods  for  a  bonded  ware- 
house the  government  requires  a  bond  from  the  importer,  with  a  surety 
that  he  will  pay  the  dnty  within  three  years,  or  export  the  goods  to 
some  other  country.  When  goods  are  consigned  tex  the  interior  of  the 
United  States,  that  is  to  cities  or  towns  which  are  not  ports  of  entry, 
the  goods  can  be  sent  from  the  port  of  shipment  to  the  port  of  entry, 
and  then  forwarded  in  bond  to  the  point  of  destination.  The  invoice, 
bill-of-ladingr  and  other  papers  are  sent  to  the  custom  house  broker  at 
the  port  of  arrival  where  the  custom  house  entries  are  made  and  the 


IMPORTING,    EXPORTING, 


goods  trans-shipped.      The  bill-of-lading  should  read  "In   bond  to 
"  wherever  the  destination  may  be. 


Examination    of   Goods. 

When  the  goods  are  discharged  from  the  vessel  they  are  sent  to 
what  is  known  as  the  United  States  appraiser's  stores  for  examination. 


"United  States  Consular  Agency 
Gera,  Germany. 


I,  Charles  Neuer,  Consular  Agent  of  the  United 
States  at  Gera,  do  hereby  c&ttf&  t^"lt  at  '^is  Consular 
Agency  on.  thiij^day  of  v^C^^^r"  A. D.,  189<2, 
the  within  invoice.  No*.  O..l^,  in  whichare  mentioned 
and 


ng,  with  the  charge*  thereon,  to  the  total  tun  of 
J.^^wa*  produced  ,o  me  by 


in  person,  the       j^^.&^/\._ 

Ofjhe  ^JZ4&^*™^.. 

who  thereupon  declared  in  writing  in  my  presence  that 

entry    of    said    mtr^iandise    was   to    be    made    at    t/ie 

^•£^y^stL 

in  bond  to 

in  the  United  States -of  America. 

1  do  further  certify  lhat  I  am  satisfied  that  the  person 
making  the  declaration,  hereto  annexed  ti  the  person  he 
represents  himself'  <»>  be.  and  that  the  price*  stated 
try  said  invoice  represents  the  actual  market  value 
or  wholesale  price  of  the  merchandise  described  in  the 
taid  invoice,  in:  She  principal  markets  of  the  country  at 
the  time  of  exportation,  excepting  as  noted  by  me  upon 
said,  invoice,  or  respecting  wnich  t  shall  make^special 
communication  to  proper  authority. 


Quantity:    ./* 

(Anzahl  der  Colli) 
Mark: 

tZeichen) 


(Betrag) 

Port  of  Shipment:  _J^7^J 

(Verschiffungs-Hafen 

Port  of  Entry: 

(Einfuhr-Hafen) 

In  Bond  to 

(Unter  Zollverschluss  uach) 

Destination:   

(Bestimmungsort^ 


Witness  my  band  and  seal  of  office  at  ,GE8A; 


/FeTT.f 


Here  the  examiners  have  the  cases  opened  and  compare  the  goods 
to  see  if  they  correspond  with  the  invoices,  and  that  the  prices  are 
correct.  Should  the  appraiser  deem  the  goods  rated  wrong,  he 
returns  the  invoice  to  the  collector's  office  where  the  matter  is 
adjusted,  and  notice  of  the  additional  duty  necessary  is  sent  to  the 


SHIPPING   AND   WAREHOUSING. 


importer.      Should   the   importer   consider  that  he  has  been  unfairly 


TELEPHONE    CONNECTION. 


OFFICE  OP 


J.  J.  Buchey  &  Co. 

Custom  House  and  fdmardtog  Agents, 

NOTARIES    PUBLIC. 

No.  57  Beaver  Street,  No.  404  Library  Street, 

NEW    YORK  PHILADELPHIA. 


Please  call  at  our 'office  before  3  o1  clock,  on 
and  complete-, same,  as  vessel  obtains  General  Order  jipon  that 
da,te 

K»/n  very  respe£lfullyt 

J.  /.  BUCHEY  6-  CO. 

404  LIBRARY  STftlEfr. 


treated   he  has  redress  by  formal   protest  to  the  board   of  govern- 
ment  appraisers.      If   this   board   decides  against  him   he  can  sue 


192 


IMPORTING,    EXPORTING. 


the   collector  and   bring  the  matter  before  the  United  States  Court. 


TELEPHONE  CONNECTION!. 

OFFICE    OF 


J.  J.  BUCHEY  &  CO.. 

ORU(pRDI|¥(j 


p 


NOTARIES  PUBLIC, 

No.  404  Literary  St.»  fio.  57  Beaver  St. 


PASSPORTS 


lifts  oeoi  liquidated  as  foticn\'S 


ShonM  you  (fiscovtittJiy  £W'fi['Jn  the  above  liquidation^ 
kindfy  notify  us  before.,  ft  ?  *rff*>  after  which  tfmet 

rorrcctions.  alterations  or fprotelts cannot  be  made. 

Yours  Very  Respectfully, 

J  J.  BUCHEY  &  Co., 

404  LIBRARY  STREET. 


Should   the  appraiser  consider  that   the  goods  have,  been   invoiced 
at   too   low  a   figure  he  «an  advance  the  same  to  what  he  considers 


SHIPPING   AND   WAREHOUSING. 


193 


right.  If  this  advance 
is  over  ten  per  cent. 
a  penalty  fine  (as  may 
be  prescribed  by  law) 
is  charged,  and  if  the 
advance  is  over  forty 
per  cent,  the  case  is 
presumed  to  be  one  of 
fraud,,  and  the  goods 
may  be  confiscated. 
Every  entry  has  to  be 
sworn  to  by  a  member 
of  the  importing  firm, 
before  the  collector  or 
one  of  his  deputies.  If 
it  is  not  convenient  for 
a  member  of  the  import- 
ing firm  to  do  this,  then 
his  agent  who  holds 
power  of  attorney,  makes 
oath,  and  gives  a  bond 
for  the  production  of 
the  importer's  declara- 
tion at  some  subsequent 
time.  When  a  con- 
signee receives  his  bilU 
of-lading-,  but  no  in- 
voice, he  can,  where  the 
value  is  less  than  $100 
make  what  is  known  as 
an  appraisement  entry , 
but  where  the  value  ex- 
ceeds $100,  and  he 
knows  the  contents  and 
prices,  he  can  make  out 
a  pro -forma  invoice, 
giving  a  bond  to  the 
government  for  the  pro- 
duction later  of  a  proper 
certified  invoice. 


Intiiin  rlfar  the  .iu  m  fif—, 

IltSUmftft'  Ct'/MH"i ... 


_rfl?J 


VrqistreTlfrk 


3* 


I 


2    1 


\{.        .   ^~ 


v.     ^ 


i^'i  1111 


1  ^s 
\    § 


Ifll 

iltif 


it 


u   c   u  *,i 


C7/;- 


iiu'/u  f>jj&j  ,>xj>/}  jfi^vifj  of  pMJ.>xt.i  si 


v.)fiitj>f.) 


194  IMPORTING,    EXPORTING, 

Storage    and    "Warehousing. 

Warehousing  is  a  very  important  industry  of  large  cities.  There 
are  hundreds  of  large  warehouses  for  the  storage  of  furniture  and 
valuables.  The  rates  for  large  articles  are  usually  a  fixed  price  per 
month  for  each  cubic  foot  of  space  occupied.  These  storage  com- 
panies usually  have  large  vans  which  are  hired  for  moving  household 
effects.  Perishable  products  such  as  meats,  vegetables,  etc.,  are  often 


MAXRIEDEU  ' 

*io.  862  BROADWAY. 


to  Alfred  Miinch,  Gera: 

C^          @ 

..     -  JJ 


to  Max  Riedel,  New  York: 


en  caitt 


yeut 


stored  in  cold-storage  warehouses  where  the  temperature  is  kept  at 
all  times  a  little  above  the  freezing  point.  Railroad  and  transportation 
companies  have  warehouses  for  storing  freight.  Besides  these,  there 
are  government  and  private  bonded  warehouses  for  storing  goods  re- 
ceived from  foreign  countries.  These  have  a  double  advantage  to  the 
importer.  He  need  not  pay  the  duty  until  he  wishes  to  remove  the 
goods,  01  he  can  negotiate  his  warehouse  receipt,  or  in  other  words 


SHIPPING   AND   WAREHOUSING. 


raise  mojey  on  his  goods  without  their  removal,  if  he  is  in  need  of 
ready  cash  and  is  waiting  for  a  profitable  market.  Bonded  warehouses, 
both  those  owned  by  the  government  and  by  private  companies,  are 
under  the  control  of  custom  house  officials  known  as  government  store- 
keepers. The  storekeeper  carries  the  keys  and  no  goods  can  be  re- 
moved without  his  consent  which  is  given  only  upon  order  from  the 
custom  house,  and  not  then  unless  the  storage  charges  have  been  paid. 
Only  goods  which  are  dutiable  go  into  bonded  warehouses.  The 
warehouse  receipt  given  by  private  warehouse  companies  is  a  negotiable 
instrument  and  maybe  used  with  banks  as  collateral  security  for  money 
borrowed,  or  the  goods  stored  may  be  sold  and  the  storage  receipt 
passed  from  the  seller  to  the  buyer  just  as  would  a  deed  or  other  instru- 
ment of  value.  The  storage  rates  vary  greatly.  The  space  occupied 
and  the  labor  of  handling  are  the  most  important  considerations. 
Flour,  for  instance,  would  cost  about  30.  a  barrel  for  the  first  30  days, 
and  2c.  a  barrel  for  each  succeeding  15  days,  If  a  rate  were  quoted 
as  10  and  8  it  would  indicate  ipc.  for  storage  and  8c.  for  labor  for  the 
first  period  of  time,  and  ice.  for  each  successive  period.  When  the 
goods  are  being  unloaded  the  ship-master  gives  a  ticket  with  par- 
ticulars of  the  goods  to  the  driver  of  the  bonded  dray.  Upon  delivery 
of  the  goods  to  the  warehouse  this  ticket  is  turned  over  to  the  store- 
keeper who  delivers  it  to  the  custom  house.  The  importer  receives  a 
delivery  order  for  each  lot  of  goods  stored.  These  orders  may  be  ex- 
changed for  a  warehouse  receipt  just  as  railroad  receipts  may  be  ex- 
changed for  a  bill-of-lading.  The  holder  of  the  warehouse  receipt  has 
a  title  to  the  merchandise  it  represents.  They  may  be  transferred  by 
endorsement.  The  usual  form  of  endorsement  is  as  follows  :  "De- 
liver to  -  or  order,  the  within  merchandise,"  followed  by  the  sig- 
nature of  the  owner.  Storage  companies  do  not  insure  the  goods. 
When  the  accrued  storage  charges  amount  to  the  value  of  the  goods, 
the  company  can  get  an  order  from  the  court  for  their  sale  to  cover  ex- 
penses. 

How    Goods   are   Exported. 

Our  export  trade  has  grown  to  very  large  proportions.  We  send 
millions  of  dollars  worth  of  raw  and  manufactured  products  to  all  parts 
of  the  world.  All  goods  shipped  abroad  have  to  be  decreed  at  a  custom 
house  on  a  blank  known  as  a  shipped  s  manifest  which  contains  a  de- 
scription of  the  goods  shipped.  This  must  be  sworn  to  before  the  col- 
lector of  customs  or  one  of  his  deputies  by  the  party  making  the  ship- 


I96 


IMPORTING,    EXPORTING,. 


ment  or  his  authorized  agent.     When  this  is  done  the  ship's  master  or 
the  transportation  company  issues  a  bill-of-lading  as  in  local  shipments. 


(CAT.  No.  657.) 

NOTICE  T(f  IMPORTER  "OF  BALANCE  IN  HIS  FAVOR. 


* 

PAID 


COLLECTOR'S  OFFICE, 


Sir: 


The  duties  on  the  importation  of  yours 


been  ascertained,  and  there  is  a  balance  in  your 

,  ss-&^ 

favor,  amounting  to  $  .//..  ./.*$T..  ...................  .-,  which  can  be 

obtained  on  application  io  the  Auditor's  Office  by  you 
or  your~agent  'authorized  in  writing  to  receipt  for  the 
same. 


Collector. 


(Ed.  6-19-UM— 7,000.) 


A  ship   cannot   clear  for  a   foreign   port   until  it  has  properly  attested 
manifests  representing  its  entire  cargo.     The  manifest  blanks  are  usu- 


SHIPPING  AND    WAREHOUSING. 


I97 


ally  provided  by  the  ship-transportation  company  as  are  bill-of-lading 
blanks.  Goods  can  be  brought  into  the  United  States  and  immediately 
exported  to  Canada,  without  payment  of  duty,  providing  the  bill  of- 
lading  states  "  For  immediate  exportation,"  or  the  imported  goods  may 
be  placed  in  a  bonded  warehouse  and  exported  any  time  within  three 


years.  The  owner  of  goods  on  which  import  duties  have  been  paid, 
is  entitled  to  have  such  duties  wholly  or  partly  paid  back  if  he  de- 
cides to  export  the  goods  to  a  foreign  point.  For  instance  a  merchant 
might  import  $1,000  worth  of  goods  from  England,  store  them  in  a 
New  York  bonded  warehouse  and  at  his  convenience  export  them  to 


198  IMPORTING,    EXPORTING, 

Cuba  or  Brazil  or  some  other  country.  It  is  evident  that  it  would  be 
unfair  to  pay  the  United  States  duty  when  the  goods  were  not  for  use 
here.  The  amount  refunded  in  such  a  case  is  called  drawback,  and  is 
fixed  by  schedule  approved  by  the  secretary  of  the  treasury.  The  claim 
for  drawback  must  be  made  before  the  goods  are  shipped  and  in  such 
form  as  the  secretary  may  prescribe.  The  advantage  of  this  system  is 
easily  seen  in  the  fact  that  it  enables  our  merchants  to  compete  with  for- 
eign traders  in  business  outside  of  our  own  country. 

Competition. 

It  is  really  true  that  competition  is  the  life  of  trade.  If  there 
were  but  one  producer,  this  producer  would  take  his  ease,  and  would 
hardly  dream  of  improving  either  the  conditions  of  his  production  or 
the  quality  of  his  products.  This  is  too  often  the  case  wherever  there 
exists  a  monopoly.  Competition  is,  therefore,  a  necessary  condition 
that  industry  may  be  kept  up  and  the  public  well  served.  Competition 
is  usually  disastrous  to  the  dealer  who  cannot  meet  his  competitors  in 
either  price  or  quality  of  goods.  Imposition  and  fraud  too  often  usurp 
the  favor  which  is  due  to  real  merit.  The  public  are  deceived  by  gaudy 
signboards  or  by  fallacious  announcements ;  they  are  attracted  by  the 
bait  of  cheapness,  and  are  cheated  with  adulterated  products.  The 
competition  of  trade  is  always  an  advantage  to  an  intelligent  community. 
It  brings  more  attractive  stores,  better  goods,  lower  prices,  and  usu- 
ally a  more  intelligent  and  careful  service.  The  grocer  who  has  a  mo- 
nopoly of  the  town's  trade  allows  you  to  call  with  your  order  and  carry 
home  your  packages  ;  he  sells  you  what  he  has  rather  than  what  you 
want.  With  competition,  he  calls  for  your  order  and  delivers  your 
groceries,  and  gets  for  you  what  you  want  whether  it  pays  him  or  not. 
Competition  is  in  reality  the  true  motive  power  of  commercial  progress. 
It  is  also  the  one  sovereign  regulator.  Things  right  themselves  through 
competition.  The  railway  charging  exorbitant  rates  "  comes  to  time  " 
when  paralleled  by  another  line.  It  is  competition,  and  competition 
alone,  which  puts  upon  goods  their  just  price.  It  does  this  so  well, 
that  there  is  not  anywhere,  where  competition  exerts  its  full  power,  a 
single  product  which  sells  regularly  either  for  more  or  for  less  than  its 
cost  of  production  including  a  reasonable  profit.  It  is  through  compe- 
tition that  all  the  occupations  of  industry  are  filled  continuously,  com- 
pletely, and  in  the  proper  proportion.  The  number  of  grocers,  or  doc- 
tors, or  teachers  must  not  be  very  largely  in  excess  of  the  demand. 
When  the  number  approaches  an  excess  the  trade  or  profession  rights 


AND  WAREHOUSING.  199 


itself  through  competition.  If  there  be  at  any  time  too  much  labor  for 
any  particular  kind  of  production,  the  wages  for  that  class  of  labor  de- 
clines, and  the  laborers  are  thereby  warned  to  seek  employment  else- 
where. If,  on  the  contrary,  there  be  a  scarcity  of  labor,  wages  go  up> 
and  this  is  a  warning  to  those  who  are  engaged  elsewhere  to  apply 
themselves  in  greater  numbers  to  where  the  scarcity  exists.  Thus,  by 
the  sole  influence  of  high  or  low  wages,  labor  is  distributed  and  divided 
with  an  almost  infallible  precision  among  the  different  branches  of  pro- 
duction according  to  the  measure  of  their  needs,  and  equilibrium  is 
nearly  always  maintained  between  the  work  to  be  done  and  the  labor 
assigned  to  it. 

Balance    of  Trade. 

In  commerce  this  term  is  commonly  used  to  express  the  difference 
between  the  value  of  the  exports  from,  and  the  imports  into  a  country. 
The  balance  used  to  be  considered  favorable  when  the  value  of  the  ex- 
ports exceeded  that  of  the  imports,  and  unfavorable  when  the  opposite 
was  the  trade  condition.  The  attainment  of  a  favorable  balance  was 
for  many  years  regarded  as  an  object  of  the  greatest  importance.  The 
precious  metals,  in  consequence  of  their  being  used  as  money,  were  long 
considered  as  the  only  real  wealth  that  could  be  possessed  either  by 
individuals  or  by  nations;  and  as  countries  without  mines  could  not 
obtain  supplies  of  these  metals  except  in  exchange  for  exported  products, 
it  was  concluded,  that  if  the  value  of  the  commodities  exported  ex- 
ceeded that  of  those  imported,  the  balance  would  have  to  be  paid  by 
the  importation  of  an  equivalent  amount  of  the  precious  metal,  and 
conversely.  A  very  large  proportion  of  the  restraints  imposed  on  the 
freedom  of  commerce  during  the  last  three  centuries  grew  out  of  this 
notion.  The  importance  of  having  a  favorable  balance  being  univer- 
sally admitted,  every  effort  was  made  to  attain  it  ;  and  nothing  seemed 
so  effectual  for  this  purpose  as  the  devising  of  schemes  to  facilitate  ex- 
portation, and  to  hinder  the  importation  of  almost  all  products,  ex- 
cept gold  and  silver,  that  were  not  intended  for  future  exportation.  It 
is  now  conceded  on  all  hands  that  the  gold  and  silver  are  nothing  but 
commodities  ;  and  that  it  is  in  no  respect  necessary  to  interfere  either 
to  encourage  their  importation  or  to  prevent  their  exportation.  The 
proper  business  of  a  wholesale  merchant  consists  in  carrying  the  various 
products  of  the  different  countries  of  the  world  from  the  places  where 
their  value  is  least  to  those  where  it  is  greatest  ;  or,  which  is  the  same 
thing,  in  distributing  them  according  to  the  effective  demand.  It  is 


200  IMPORTING,    EXPORTING, 


clear  that  there  could  be  no  motive  to  export  any  species  of  produce, 
unless  that  which  it  was  intended  to  import  in  its  stead  were  of  greater 
value.  So  far  as  an  excess  of  exports  over  imports  being  any  criterion 
of  an  advantageous  commerce,  it  is  directly  the  reverse  and  the  truth 
is  that  unless  the  value  of  the  imports  exceed  the  value  of  the  exports, 
foreign  trade  could  not  be  carried  on.  Were  this  not  the  case— that  is, 
were  the  value  of  the  exports  always  greater  than  the  value  of  the  im- 
ports— merchants  would  lose  on  every  transaction  with  foreigners,  and 
the  trade  with  them  would  be  speedily  abandoned.  It  is  almost  impos- 
sible to  compare  the  real  value  of  the  imports  with  the  real  value  of  the 
exports.  The  value  of  an  exported  commodity  is  estimated  at  the 
moment  of  its  being  sent  abroad,  and  before  its  cost  is  increased  by  the 
expense  of  transporting;  whereas  the  value  of  the  commodity  imported 
in  its  stead  is  estimated  after  it  has  arrived  at  its  destination,  and,  con- 
sequently, after  its  cost  has  been  enhanced  by  the  expense  of  freight, 
insurance,  importers'  profits,  etc.  In  the  second  place,  when  a  balance 
is  due  from  one  country  to  another,  it  is  not  always  evident  from  the 
fact  that  one  country  is  sending  gold  to  the  other*  The  laws  which 
regulate  the  trade  in  bullion  are  not  in  any  degree  different  from  those 
which  regulate  the  trade  in  other  commodities*  It  is  exported  only 
when  its  exportation  is  an  advantage,  or  when  it  is  more  valuable  abroad 
than  at  home.  It  is  next  to  impossible,  then,  to  tell  from  the  imports 
or  exports,  or  from  the  fact  that  gold  is  being  shipped  abroad,  whether 
the  balance  of  trade  is  against  or  in  favor  of  a  particular  country. 


EXAMINATION  QUESTIONS. 

1.  Distinguish  between  the  terms  commerce  and  business  as  these 
terms  are  generally  used. 

2.  Enumerate  the  countries  and  agencies  which  contribute  to  pro- 
duce a  full-course  dinner  such  as  might  be  given  at  one  of  our  best 
hotels. 

3.  We  find  in  every  city,  institutions  known  as  boards  of  trade, 
chambers   of  commerce,  etc.     Give   the   nature  and  purpose  of  such 
organizations. 

4.  What  are  our  internal  revenue  taxes  and  how  are  they  collected  ? 

5-  Distinguish  between  duties  for  revenue  and  duties  for  protec- 
tion. 

6.  Distinguish  between  an  ad  valorem  duty  and  a  specific  duty. 
Which  kind  of  duty  would  you  expect  upon  the  following :  glass ; 
silk;  flour;  knives;  raw  wool;  furniture;  potatoes;  wine;  books;  rice; 
marble;  carpet? 

7»  What  is  a  "  port  of  entry  "  ? 

8.  What  are  the  duties  of  a  customs  naval  officer?  of  an  appraiser? 
of  a  custom  house  storekeeper  ? 

9.  Distinguish  between  import  trade  and  in-transit  trade.     What 
is  meant  by  entry  for  consitmption  ? 

10.  A  of  Boston  buys  in  Holland  $5,000  worth  of  china,  through 
a  New  York  agent  who  charges  him   2^/2  per  cent,  commission.     The 
goods  are  entered  at  Boston  where  $250  freight  is  paid.     They  are  im- 
mediately exported  to  Brazil :  what  is  their  foreign  export  value? 

11.  Give  in  detail  the  routine  necessary 

1.  in  importing  goods. 

2.  in  exporting  goods. 

12.  What  are  the  duties  of  our  foreign  consuls  with  reference  to 
the  importation  of  goods?     How  may  goods  be  shipped  from  a  point 
where  there  is  no  consul  located  ? 

13.  What  is  the  business  of  a  Custom  House  Broker  f 

14.  Distinguish  between  what  is  known  as  a  cash  entry  of  goods 
and  a  warehouse  entry. 

[202] 


IMPORTING,    EXPORTING,    SHIPPING    AND    WAREHOUSING.  203 


15.  What  is  the  penalty  for  incorrectly  or  fraudulently  invoicing 
imported  goods? 

16.  Give  some  particulars  of  the  storage  and  warehouse  business 
of  large  cities. 

17-    What  are  the  advantages  to  the  importer  of  bonded  ware- 
houses ? 

18.   Give  the  particulars  in  which  a  warehouse  receipt  resembles 
find  differs  from  (i)  a  promissory  note,  (2)  a  bill-of-lading. 

19*  Describe  the  form  and  use  of  a  ship's  manifest. 

20.  What  is  known  as  a  drawback  in  "  foreign  export  trade"  ? 

21.  The  competition  of  trade  is  always  an  advantage  to  an  intelli- 
gent community  and  usually  to  the  competing  houses  themselves.     Ex- 
plain. 

22.  "  Things   right   themselves   through   competition."     Discuss 
tli is  statement  from  an  economic  standpoint. 

23.  Is  it  an  encouraging  or  discouraging  economic  condition  when 
uur  imports  are  in  excess  of  our  exports?     Discuss  fully. 

24.  Find  the  duty  on  100  boxes  of  plate  glass,  each  containing  16 
plates  (20x36).     Duty  22C.  per  square  foot.     (Ans.  $1,760.) 

25.  What  is  the  ad  valorem  duty  on  45  boxes  of  brass  nails,  2olb. 
per  box,  invoiced  at  I3C.  a  ft>.,  duty  45  per  cent.,  and  tare  4^ft>s.  per 
box?     (Ans.  $40.80.) 


MISCELLANEOUS  QUESTIONS  AND  EXERCISES. 

1.  What  are  the  advantages  to  the  United  States  commercially  cl 
its  (i)  foreign   consuls?  (2)  the  international   Postal  Union ?  (3)  its 
census  statistics  ? 

2.  What  city  is  America's  greatest  (i)  leather  market  ?  (2)  cotton 
market  ?  (3)  flour  market  ?  (4)  wheat  market  ?  (5)  tobacco  market  ? 

3.  Name  and  locate  the  five  cities  which  in  your  opinion  do  the 
largest  shipping  trade  in  the  world. 

4.  Of  the   raw  products  produced  by  the  United  States  name  the 
three  which  are  commercially  the  most  valuable. 

5.  Why  do  not  foreign  steamers  engage  in  the  carrying  trade  of 
the  Mississippi? 

6.  Enumerate   the  executive  departments  of  the  Federal  govern- 
ment represented  by  cabinet  officers,  and  describe  the  duties  of  each. 

7«  Describe  the  process  by  which   a  bill  becomes  a  law  in  the 
Federal  Congress. 

8.  S.  T.  Jacobs  makes  a  deposit  of  $20  on  an  order  for  goods  (to 
be  manufactured)  which  he  places  with  your  house.     Write  a  receipt 
for  the  money. 

9.  What  is  the  foreign  letter  rate?     What  will  it  cost  to  send  a 
book  weighing   2^   fts.  and  a  parcel  weighing  i^   rbs.  to  Denver  ? 
How  may  money  be  sent  safely  by  mail  ?     Give  particulars. 

10.  You  ship  goods  by  freight  and  draw  at  sight   on  the  pur- 
chaser ;   how  can   you  keep  control  of  the  goods  until  your  draft  is 
paid  ?     How  can   you  raise  money  on  goods  which  you  have  bought 
and  paid  for,  while  they  are  in  transit  or  in  bonded  warehouse? 

11.  Explain  what  is  meant  by  (i)  vouchers,  (2)  accrued  interest, 
(3)  in  bond,  (4)  collateral  security,  (5)  blank  endorsement. 

12.  What   is  meant  by  a  trust  as  this  term  is  used  by  manufac- 
turers ?     How  does  a  trust  differ  from  a  syndicate  ? 

13.  Why  is  it  necessary  to  search  the  title  to  real  estate  ?     Where 
are   the  titles  recorded  ?     What  are  the  advantages,   if  any,   to  the 
public,  of  title  insurance  companies? 

14.  How  do  country  banks  clear  their  checks  ? 

[204] 


MISCELLANEOUS   QUESTIONS    AND    EXERCISES.  205 

15.  Distinguish  between   statute  and   common  law.     Explain  the 
meaning  of  executor,  chattel  mortgage,  lien,  attachment,  judgment,  and 
trustee  process. 

16.  How  does  a  mortgage  differ  from  a  deed  ? 

!?•  What  bookkeeping  entries  would  you  make  when  you  pay  in 
cash  a  time  draft  by  Robson  Davids,  brought  to  you  for  acceptance  ? 

18.  You  have  material  from  your  store  valued  at  $72.23  made  up 
into  coats  at  an  expense  for  labor  of  $32.90.  What  entry  ? 

I9«  You  have  made  three  errors  in  your  bookkeeping  :  i.  You 
have  entered  $27.50  on  the  debit  side  of  expense  when  it  should  have 
been  entered  on  the  debit  side  of  merchandise.  2.  You  have  forgotten 
to  charge  A  with  a  cash  payment  of  $17.39.  3.  You  have  be.2n 
charged  interest  $5.33  and  you  have  entered  the  amount  on  the  wrong 
side  of  the  interest  account.  Which  side  of  your  trial  balance  will  be 
the  larger  and  how  much  ? 

20.  What  great  advantages  have  resulted  to  society  through  the  in- 
troduction of  machine  methods  of  production  ?     What  evils  have  arisen 
from  this  industrial  development? 

21.  Describe  fully  the  national  banking  system. 

22.  Bookkeeping  problem  :     Value  of  merchandise  on  hand,  Jan. 
i,  $2,372;   bought  during  the  year  rndse.  costing  $1,486  (cash)  :  and 
bought  on   credit,  mdse.  costing  $2,432.     Cash  sales  during  the  year 
amount  to  $2,946.     Credit  sales  same  time,  $2,007.     Gross  expenses, 
$494.     Accounts    against   others    which    cannot   be    collected,    $304. 
Value   of   mdse.    on  hand,   Dec.    31   following,  $3,270.     Make  out  a 
financial  statement  showing  the  gain  or  loss. 

23.  Exchange  on  London  is  quoted  in  Paris  at  25.32^  francs  to 
the   £,  and   the  London   exchange  is  quoted  in  New  York  r/.  4.89^. 
Find  the  value  in  American  money  of  5,000  francs. 

24.  Find   the  net   capital  (Jan.  i,  1895)  having  given  the  follow- 
ing items  :     On  hand,  cash,  $3,469.     Consignment  of  mdse.  from  A 
valued  at  $2,000,  upon  which  freight  of  $93  has  been  paid.     Note  made 
Nov.  15,  1894,  at   2   months,  for  $1,200   with  interest  at  7  per  cent. 
We  shipped   mdse.  valued   at   $984  to  B,  and  paid  insurance,  $23,  on 
Dec.  15,  but  have  not  yet  received  net  proceeds.     We  have  rent  paid  in 
advance   for  Jan.  and  Feb.  at  $67  a  month.     We  owe  a  note  of  $1,700 
made  Dec,  i,  at  60  days,  with  interest  at  7  per  cent. 


206  MISCELLANEOUS    QUESTIONS    AND    EXERCISES. 

25.  What  is  meant  by  the  balance  of  trade  between  America  and 
Europe  ? 

26.  Draw  up  an   agreement  between  yourself  and  Henry  Banner- 
man  with  reference  to  some  particular  venture,  or  sale,  or  contract. 

27.  Write  a  receipt  for  borrowed  money  returnable  with  interest. 
Write  a  receipt  in  part  payment  of  an  account. 

28.  When  does  a  bill  of  lading  cease  to  be  what  is  known  as  a 
clean  bill  of  lading?     Give  some  of  the  conditions  which  usually  ap- 
pear on  a  bill  of  lading. 

29.  Describe  fully  the  different  methods  of  sending  money  to  dis- 
tant points. 

30*  Describe  fully  (i)  how  to  send  a  package  by  express  C.  O. 
D.  ;  (2)  how  to  send  a  box  by  freight;  (3)  how  to  get  a  check  in 
your  favor  cashed  at  a  bank. 

3i«  What  is  meant  by 

1.  foreclosing  a  mortgage  ? 

2.  discharging  a  mortgage  ? 

32.  You  are  keeping  a  business  man's  cash  book.     During  your 
temporary  absence,  and  without  your  knowledge,  $5  is  stolen  from  your 
cash  drawer.     How  will  you  find  this  out  at  the  end  of  the  day? 

33.  Describe  fully   the   different  kinds  of  money  in  use  in  the 
United  States. 

34.  Borrowed  $4,000  on  Jan.  i,  to  invest  in  merchandise.     Gross 
purchases  of  merchandise   during  the  year  $8,426.37,  and  gross  sales 
$7,246.39.     On  Dec.  31,  I  owe  accounts  (exclusive  of  money  borrowed) 
amounting  to  $3,734.25,   and  others  owe  me  $3,682.76.     I  have  cash 
on  hand,   $2,942.48,  and    mdse.   valued   at  $4,076.21.     Make  out    a 
statement  showing  how  much  I  gained  or  lost  during  the  year. 

35.  Explain  any  difference  in  meaning  between  the  terms  :   trade 
and  traffic ;  currency  and  money ;  goods  and  wares ;   buyer  and  con- 
sumer;   commerce  and  business. 

36.  Explain  any  reasons  for  the  great  variations  in  the  rate  of  in- 
terests in  different  classes  of  investments.     Why  is  money  cheaper  in 
London  than  in  New  York? 

37.  The  American  Express  Company's  traveler's  cheque  for  $20  is 
quoted  as  worth  ^4  is.  2d.  in  England,  102.5  francs  in  France,  and 


MISCELLANEOUS    QUESTIONS    AND    EXERCISES.  2Of 


82.5  marks  in  Germany.     Find  the  value  in  each  of  these  currencies  of 
a  cheque  for  $39.18. 

38.  A   savings  bank    pays   %  per  cent,   per  month  interest  and 
credits  the  interest  to  all  accounts  on  the  first  day  of  each  month,  in- 
terest dates  from  the  first  of  each  month  and  is  not  allowed  for  frac- 
tional   parts   of  a   month.     The    following    is  a   transcript  of  Henry 
Brown's  deposits  and  withdrawals  : 

Deposits:  Jan.  13,  $94.16;  Jan.  27,  $14.86;  Feb.  3,  $49.03  ; 
Mar.  i,  $87.24;  Mar.  20,  $96.37;  April  19,  $80;  July  5,  $120.47  ; 
Aug.  30,  $103.64;  Sept.  3,  $7.50;  Oct.  13,  $96.80;  Dec.  10,  $200. 

Withdrawals  :  Feb.  15,  $50;  Mar.  13,  $15.67;  April  2i,$ioo; 
June  4,  $17.80;  Aug.  13,  $28.30;  Oct.  3,  $42;  Nov.  8,  $20;  Dec. 
24,  $100. 

How  much  should  Brown's  balance  be  Jan.  i  ? 

39.  Describe  fully  the  monetary  system  of  Canada. 

40.  Enumerate  some  of  the  advantages  of  decimal  money  systems 
such  as  ours  over  the  English  system  of  pounds,  shillings,  and  pence. 

41.  Are  there  any    interest  advantages  in  using   instruments   of 
credit  instead  of  actual  cash  in  the  mechanism  of  exchange? 

42.  What  would  be  the  immediate  economic  effect  if  every  man, 
woman,  and  child  in  the  United  States  were  given,  say  $50,000  ?     Is 
increase  of  money  increase  of  wealth  ? 

43.  What  would  be  the  immediate  economic  effect  if  Congress  should 
pass  a  law  making  all  paper-money  in  circulation  interest-bearing  at 
the  rate  of  4  per  cent  ? 

44-  "  The  currency  and  credit  instruments  of  a  country  should  at  no 
time  exceed  in  value  its  real  and  personal  property."     Discuss  this 
statement. 

45-  What  European  city  is  recognized  as  a  clearing  or  adjusting 
center  for  the  telegraphic  business  of  the  world? 

46.  Enumerate  some  of  the  commercial  advantages  derived  from 
the  general  use  of  checks  and  other  instruments  of  credit.  Is  a  credit 
system  an  advantage  or  a  disadvantage  to  a  community? 

47»  What  are  the  advantages  to  the  world's  commerce  of  the  great 
expositions  held  here  and  abroad  ? 


20*  MISCELLANEOUS    QUESTIONS    AND    EXERCISES. 

48.  Enumerate  some  of  the  advantages  which  a  large  business  has 
over  a  small  one. 

49-  Enumerate  some  of  the  business  qualifications  necessary  to 
success. 

1.  as  a  banker. 

2.  as  a  manufacturer. 

3.  as  president  of  a  railway. 

4.  as  a  retail  merchant. 

50.  What  is  the  commercial  or  economic  effect  of  the  large  in- 
crease in  cities  of  large  department  stores? 

51.  In  considering  the  wealth  of  a  nation  would  you  include  (i) 
public  roads?     (2)  its  bank-notes?     (3)  its  foreign  credit  ? 

52.  Distinguish    carefully    between    what   is   wealth   to   an   in- 
dividual, and  what  is  wealth  to  a  nation. 

53.  Does  the  payment  of    wages  increase  or  diminish  capital  ? 
Would  you  regard  the  groceries  in  your  home  ready  for  use  as  capital? 
How  about  the  groceries  on  the  shelves  at  the  grocers  ? 

54.  Generally  speaking  does  increased  population  increase  wealth? 
Give  illustrations. 

55 •  Note  carefully  the  effect  on  the  price  of  a  particular  article  of 
food  of  each  of  the  following  : 

1.  A  very  large  crop. 

2.  A  very  small  crop. 

3.  A  larger  number  of  sellers. 

4.  Fewer  sellers. 

36.  Consider  whether  wages  would  be  increased  by— 

1.  A  successful  system  of  technical  education. 

2.  A  large  increase  in  the  value  of  land. 

3.  A  larger  number  of  competing  manufacturers. 

57«  Discuss  fully  the  advantages  of  Trades  Unions  and  Labor  Or- 
ganizations, such  as  are  common  throughout  the  country. 

58.  What  are  the  advantages  of  co-operative  industries  ?  Give  il- 
lustrations. 

59»  A  manufacturer  arranges  to  distribute  among  his  employees  ^ 
of  his  profits,  after  taking  5  per  cent,  on  his  invested  capital.  Wherein 
does  this  system  resemble,  and  wherein  does  it  differ  from,  co-opera- 
tion ?  What  would  be  the  chief  advantages,  and  what  the  chief  dif- 
ficulties, of  such  a  plan  ? 


MISCELLANEOUS   QUESTIONS   AND    EXERCISES.  209 

60.  "  The  value  of  any  commodity,  of  which  the  supply  can  be  increased,  tends 
towards  the  cost  of  reproducing  a  commodity  of  equal  utility,  and  this  cost  depends 
on  the  quantity  and  quality  of  the  labor  involved  in  the  production,  and  on  the  rate 
of  interest,  and  the  time  during  which  capital  is  locked  up  in  the  production." 

Discuss  fully  this  general  law  of  value. 

61.  Analyze  as  fully  as  you  can  the  causes  which  determine  the 
price  of  peaches  at  a  given  time  in  a  given  market. 

62.  Give  a  definition  of  money.     Would  you  consider  bank-notes 
or  checks  money  ?     What  would  be  the  advantage  or  disadvantage  in 
the  use  of  wheat  as  money  ? 

63.  Explain  what  is  usually  meant  by  bimetallism. 

64.  To  what  extent  do  prices  depend  upon  the  productiveness  of 
mines? 

65  •  What  is  meant  by  the  appreciation  of  gold? 

66.  What  would  be  the  effect  upon  the  industries  and  finances  of 
the  country  of  discontinuing  entirely  the  use  of  bank-notes  ? 

67.  What  would  be  the  immediate  effect  upon  American  industries 
(i)   of  a  harvest  equal  to  double  that  of  an  ordinary  year  ?     (2)  of  a 
great  European  war? 

68.  Consider   how   far  credit   is   an   efficient  substitute,  (i)  for 
money  ;   (2)  for  capital. 

69.  What  do  you  consider  to  be  the  chief  causes  and  effects  of 
commercial  panics?     Were  there  any  commercial  advantages  in  the 
panic  of  1893  ? 

70-  Why  is  it  that  this  country  imports  very  largely  what  it  can 
easily  produce  in  abundance  ?  Give  instances. 

?i«  Enumerate  some  of  the  economic  advantages  of  an  extensive 
foreign  trade. 

72.  In  England  the  excess  of  imports  over  exports  is  considered  a 
satisfactory   feature   of  her  economic  condition.     In  India,  which  is  a 
British  colony,  the  opposite  is  true.     Account  for  this. 

73.  How    should   you    expect   the   exports   and    imports   of  two 
countries  to  be  affected  by  the  fact  that  one  was  able  to  impose  a  heavy 
tribute  on  the  other  ? 

74-  How  should  you  expect  the  rate  of  exchange  between  England 


2io  MISCELLANEOUS  QUESTIONS  AND  EXERCISES. 


and  America  to  be  affected  by  a  bad  English  harvest,  assuming  that  the 
deficiency  was  largely  made  up  by  importation  from  America? 

75  •  To  what  extent  should  you  consider  the  foreign  trade  of  a 
country  to  be  a  test  of  its  prosperity. 

76.  What  is  generally  understood  by  (i)  a  protective  tariff?  (2) 
a  tariff  for  revenue  only?  Discuss  the  policy  of  imposing  duties  to  es- 
tablish an  industry  which  is  expected  ultimately  to  flourish  without 
protection. 

77«  From  an  American  standpoint  consider  arguments  for  and 

against : 

1.  The  government  ownership  of  railways. 

2.  Congress  fixing  wages  and  hours  of  labor. 

3.  Government  pensions  for  all  kinds  of  workers. 

78.  How  do  cities  make  provision  for  special  expenditures? 

79.  Name  the  various  ways  in  which  a  Philadelphia  merchant  may 
discharge  debts  due  in  Boston,  Montreal,  London  and  Calcutta. 

80.  Why  are  notes  of  individuals  or  of  corporations  often  held  in 
large  quantities,  in  preference  to  bank  notes  ? 

81.  Explain  the  use  of  the  terms  warrant,  scrip,  actuary,  admin- 
istrator, arbitrage,  bill  of  stores,   bond  of  indemnity,  bounty,  charter 
party,  composition  deed,    debenture,  dockage,  executo^,  notary  public, 
salvage,  voucher. 

82.  «  The  purchasing  power  of  money  in  the  markets  of  the  world 
is  governed  by  its  commodity  value."     Explain  the  meaning  of  this 
statement. 

83.  What  is  meant  by  fiat  money  ? 

84.  Where  is  the  United  States  Sub-Treasury  located?     It  is  a 
member  of  what  clearing  house  association  ?     What  advantage  does  if 
secure  from  this  membership  ? 

8s,  Give  a  brief  outline  of  the  National  Banking  Act  of  1863. 


SUPPLEMENTARY    NOTES.  211 

SUPPLEflENTARY  NOTES. 

Prime    Exchange. 

This  name  is  given  to  bills  issued  by  houses  of  known  solvency, 
whose  drafts  are  everywhere  accepted,  and  the  character  of  whose 
credit  is  beyond  question. 

Paper    Due    Outside    the    State. 

If  you  hold  a  note  due  in  another  state,  deposit  it  in  your  own 
bank  for  collection,  or  send  it  direct  to  a  local  bank  in  the  city  or 
town  where  it  is  payable. 

Buying    Goods. 

Large  houses  in  the  great  commercial  centers  employ  buyers  who 
are  specialists — men  who  are  thoroughly  familiar  with  the  market 
prices  and  who  know  the  trade  and  all  its  influences  through  and 
through.  The  buyers  for  large  houses  are  well  paid,  some  of  them  re- 
ceiving as  high  as  twenty  thousand  dollars  a  year. 

Credit    Department. 

This  name  is  given  to  that  department  of  a  large  mercantile  estab- 
lishment which  has  charge  of  the  credits,  that  is,  which  passes  upon 
the  credit  of  its  buyers.  A  well  managed  credit  department  does  not 
rely  entirely  upon  the  reports  of  mercantile  agencies  but  gathers  infor- 
mation as  to  the  standing  of  customers  from  all  possible  sources. 

Mercantile    Agencies* 

The  tv/o  leading  commercial  agencies  of  the  United  States  are 
Bradstreef  s  and  Dim  <5r»  Co.'s.  These  concerns  gather  from  every 
village,  town,  and  city  reports  upon  the  financial  condition  of  every 
man  or  firm  doing  business.  A  digest  of  these  reports  is  printed  in  a 
very  large  book  which  is  issued  quarterly  and  sold  to  subscribers  at 
quite  a  high  price.  Nearly  all  large  houses  doing  a  credit  business  are 
subscribers  to  one  or  both  of  these  agencies.  "  Should  information 
furnished  by  an  agency,  except  where  obtained  from  the  injured  person, 
be  injurious  to  the  credit  of  a  person,  and  such  information  be  proven 
to  be  false,  the  courts  have  held  that  he  has  a  cause  of  action  against 
the  agency  for  the  damage  he  has  sustained  through  the  injury  thereby 
done  to  his  credit.  Or  should  credit  be  extended  upon  the  strength 
of  information  given  by  a  commercial  agency,  which  information  was 
clearly  inaccurate,  and  the  agent  of  such  agency  could  easily  have  dis- 
covered it  to  be  inaccurate,  the  agency  can  be  held  for  the  damage 
thereby  suffered." 


212  SUPPLEMENTARY    NOTES- 


Foreign    Commercial    Bills. 

The  price  is  governed  by  the  condition  of  the  exchange  market, 
and  the  length  of  time  the  bills  have  to  run.  Bills  payable  at  sight 
are  purchased  at  the  market  rate  of  exchange,  and  those  payable  on 
time  at  the  market  rate,  minus  the  interest  considered  at  the  current 
rate  in  the  country  where  the  bill  is  payable.  The  interest-time  is  the 
time  from  the  date  of  purchase  to  the  date  of  maturity.  The  interest 
is  deducted  when  the  bill  is  bought.  Time  bills  usually  cost  less  than 
their  face  value. 

Charges    for    Letters    of   Credit. 

A  commission  of  one  per  cent  is  charged  upon  all  letters  not  ex- 
ceeding ^500.  Interest  is  allowed  when  the  face  of  the  letter  exceeds 
^£1,000.  When  the  face  of  the  letter  is  not  entirely  drawn  upon,  the 
balance  due  is  payable  upon  demand  at  the  issuing  bank  or  any  of  its 
correspondents. 

Value    of   Standard    Coins. 

The  Treasury  Department  at  Washington  issues  quarterly  a  table 
giving  the  government  estimate  in  gold  of  the  coins  of  all  countries. 
This  estimate  is  made  simply  for  the  purpose  of  valuing  imports. 

Declaring    Dividends. 

A  dividend  cannot  be  declared  until  the  operating  expenses,  fixed 
charges,  etc.,  of  a  stock  company  have  been  met.  The  shareholder  is 
regarded  in  law  as  a  partner,  and  therefore  the  last  person  entitled  to 
share  in  the  distribution  of  its  assets. 

Bondholders. 

The  student  must  distinguish  clearly  between  a  bondholder  and  a 
stockholder.  To  illustrate :  A  buys  a  quarter  interest  in  a  piece  of 
property;  he  is  in  a  sense,  a  share-holder.  B  loans  money  on  the 
property  and  takes  a  mortgage  as  security ;  the  mortgage  is  a  form  of 
bond  ;  he  is  therefore  a  ^^^/-holder. 

Classification    of  Stocks. 

i.  Assessable.  2.  Non -assessable.  3.  Preferred.  4.  Common. 
5.  Cumulative.  6,  Non-cumulative. 

Assessable    Stock. 

The  holder  of  assessable  stock  is  liable,  upon  the  failure  of  the 
company,  to  be  assessed  personally  for  an  amount  equal  to  the  amount 
of  the  stock  which  he  held. 


SUPPLEMENTARY   NOTES.  §13 


Preferred    Stock. 

This  stock  has  a  preference  over  other  stock  in  the  payment  of 
dividends.  The  holder  is  one  of  the  first  to  share  in  the  net  earnings. 
The  dividend  is  usually  stated  in  the  stock  certificate;  that  is  to  say, 
the  holder  of  preferred  stock  carrying  6%  dividend  will  receive  his 
6%,  and  share  also  in  the  general  division  of  the  remainder  if  it  is 
likely  to  be  in  excess  of  the  dividend  which  he  has  received  as  a  pre- 
ferred stockholder. 

Cumulative    Stock. 

When  the  corporation  agrees  to  pay  dividends  past  due  and  un- 
paid before  declaring  new  dividends  the  stock  is  said  to  be  cumulative. 
This  feature  is  effective  only  against  subsequent  shareholders. 

Issue    of  Bonds* 

Bonds  can  only  be  issued  by  the  consent  and  direction  of  the 
shareholders  of  a  company,  because  of  the  fact  that  their  property  be- 
comes mortgaged,  making  them  necessary  parties.  In  the  case  of  rail- 
roads, bonds  are  issued  against  its  road,  its  branches,  its  securities,  its 
equipment,  its  earnings — almost  anything  in  the  nature  of  a  security. 

First    Mortgage    Bonds. 

These  bonds  constitute  a  first  lien  on  the  property,  as  such  prop- 
erty exists  when  mortgaged.  Second  mortgages  are  payable  only  after 
the  first  mortgages  have  been  met. 

Consolidated    Mortgage    Bonds. 

These  are  issued  to  take  up  and  fund  the  prior  bonds  standing 
against  a  property.  They  are  a  first  lien  only  upon  the  retirement  of 
previous  liens. 

Income    Bonds. 

These  are  secured  by  a  mortgage  on  the  earnings  of  a  corporation 
after  the  payment  of  prior  claims.  They  are  interest  bearing  and  the 
interest  is  payable  before  any  stockholder's  dividend  can  be  declared. 

Collateral    Trust    Bonds. 

Bonds  issued  upon  collaterals  deposited  with  trust  companies  giv- 
ing the  trust  companies  power  to  sell  the  collaterals  and  redeem  the 
bonds  upon  the  failure  of  the  issuer  to  carry  out  the  conditions  of  the 
bonds.  These  bonds  are  frequently  issued  upon  the  absorption  by  one 
corporation  of  smaller  companies. 


214  SUPPLEMENTARY   NOTES. 


Debenture    Bonds. 

This  name  is  commonly  given  to  bonds  which  have  real  estate 
mortgages  as  collateral  security.  Debenture  bonds  frequently  contain 
a  sinking  fund  clause. 

Certificate    of  Indebtedness. 

The  holder  of  such  a  certificate  issued  by  a  corporation  has  a 
claim  upon  the  assets  of  the  company  and  if  the  certificate  is  not  paid 
within  the  time  named  he  may  apply  to  the  court  to  have  a  receiver  ap- 
pointed. 

Receiver. 

When  a  property  is  placed  under  the  management  of  a  receiver,  it 
is  in  the  hands  of  the  court  under  whose  jurisdiction  the  receivership 
has  been  granted.  "  The  rules  which  ordinarily  apply  to  the  financier- 
ing of  a  corporation  as  regards  its  stock  and  bonds  may,  at  the  will  of 
the  receiver,  if  approved  by  the  court,  be  set  aside.  The  receiver 
operates  the  property,  under  the  direction  of  the  court,  for  the  benefit 
of  its  security  holders."  Occasionally  it  is  necessary  for  the  court  to 
recommend  the  issue  of  receiver' s  certificates  for  the  purpose  of  raising 
money  for  the  company.  Such  certificates  take  precedence  over  every 
other  obligation  of  a  company,  and  for  this  reason  are  considered  good 
investment  securities. 

Officers    of  Stock    Companies. 

The  duties  or  powers  of  officers  are  usually  prescribed  by  the  by- 
laws of  the  company.  The  president  is  usually  the  chairman  of  the 
board  of  directors.  By  direction  of  the  board  of  directors  he  signs 
contracts,  agreements,  etc.  He  is  intrusted  with  the  general  management 
of  the  company  and  the  employment  of  its  subordinates.  The  vice- 
president  assists  the  president  or  acts  for  him  in  his  absence.  The  sec- 
retary is  responsible  for  the  records  of  the  company  and  signs  docu- 
ments with  the  president.  The  treasurer  is  the  financial  manager. 
The  general  manager  acts  for  the  company  in  its  general  manage- 
ment. 

Active    Stocks. 

These  have  separate  places  assigned  to  them  on  the  floor  of  the 
stock  exchange,  and  when  out  of  the  continuous  roar  of  voices  we  hear 
a  broker  call  out  "five  hundred  ^ths,"  we  learn  the  name  of  the 
stock  from  the  broker's  location  on  the  floor,  and  know  that 


SUPPLEMENTARY   NOTES.  215 


is  the  fraction  of  a  dollar  at  which  the  stock  is  offered,  no  one  consider- 
ing it  necessary,  except  in  case  of  an  unusual  rise  or  fall  in  stocks,  to 
state  the  whole  number  of  dollars,  as  that  is  presumed  to  be  known  by 
everybody  on  the  floor. 

Private    Bankers. 

The  volume  of  business  done  by  private  bankers  is  very  large. 
The  aggregate  capital  of  the  New  York  City  national  and  state  banks 
does  not  exceed  $140,000,000,  while  the  capital  of  the  private  bankers 
of  New  York  City  exceeds  $450,000,000.  The  character  of  the  busi- 
ness of  private  bankers  is  somewhat  different  from  that  of  national 
banks.  They  lend  their  capital  largely  for  the  promotion  of  new  en- 
terprises, that  is,  they  advance  money,  and  receive  in  exchange  the 
bonds  and  stocks  of  the  enterprise  promoted ;  these  they  dispose  of  to 
their  customers. 

Stock   on   Margin. 

A  great  deal  of  stock  is  bought  on  margins.  Some  brokers  require 
a  larger  margin  than  others,  and  all  brokers  require  heavier  margins  on 
some  stocks  than  on  others ;  while  there  are  stocks  that  brokers  will 
not  handle  on  margins  at  all.  The  amount  of  margin  required  is  de- 
pendent both  on  the  character  of  the  stock  and  the  condition  of  the 
money  market.  Brokers  reserve  to  themselves  the  right  to  call  for  more 
margin  if  necessary.  As  a  rule,  any  of  the  active  stocks  can  be  bought 
on  a  ten  per  cent,  maxjjin,  with  an  interest  charge  of  five  per  cent,  on 
the  ninety  per  cent.  wbiDh  the  broker  assumes. 

Warrant, 

The  name  wan  %nts  is  sometimes  given  to  the  drafts  drawn  by  its 
officers  upon  the  treasury  of  a  corporation. 

Scrip. 

A  dividend  payttle  in  stock  issued  upon  the  capital  of  a  com- 
pany is  sometimes  calk  1  scrip. 

Primage  0 

A  percentage  alia  Ted  by  shippers  to  the  owners  or  characters  of  a 
vessel  for  the  loading  e '  goods  is  called  primage. 

Notary    Public. 

A  state  officer  empowered  by  commission  to  take  acknowledg- 
ments, administer  oaths,  take  depositions,  and  protest  negotiable  paperf 
within  a  certain  count/  prescribed  by  law. 


Il6  SUPPLEMENTARY  NOTES. 

Actuary. 

An  expert  in  the  application  of  the  doctrine  of  annuities,  especi- 
ally with  reference  to  insurance  is  called  an  actuary.  His  duties  are 
usually  to  deduce  from  statistics,  data,  mortuary  tables,  etc.,  the  value 
of  contingent  assets,  the  amount  of  accruing  indebtedness,  the  proper 
premium  charges,  and  to  furnish  statements  of  the  company's  condition. 

Bounty. 

A  premium  paid  by  the  government  to  men  engaged  in  certain  in- 
dustries, such  as  the  bounty  at  one  time  paid  to  sugar  growers,  is  called 
a  bounty  ;  when  paid  to  steamship  or  railway  companies  it  is  called  a 
subsidy. 

Call    Loans. 

Banks  lend  very  large  sums  of  money  on  call,  taking  stocks  and 
other  similar  properties  as  security.  For  such  loans  they  charge  a  very 
small  rate  of  interest.  The  money  can  be  called  in  on  very  short  no- 
tice and  in  case  of  failure  to  meet  the  call  the  securities  are  put  upon 
the  market  and  sold.  Call  loan  money  is  usually  money  which  would 
if  not  loaned  in  this  way  remain  in  the  vaults  of  the  bank.  It  may  be 
needed  by  the  bank  at  any  moment  and  the  risk  of  a  long  loan  cannot 
be  taken. 

Reserve   Fund* 

The  national  banks  in  certain  large  cities  are  required  by  law  to 
hold  a  lawful  money  reserve  of  25  per  cent,  of  their  deposits;  all  other 
national  banks  15  per  cent.  The  5  per  cent,  redemption  fund  is  in- 
cluded in  the  reserve. 

Bank   Tax* 

The  national  banks  pay  to  the  United  States  a  tax  of  I  per  cent, 
annually  upon  the  average  amount  of  their  notes  in  circulation,  ^ 
per  cent,  annually  upon  the  average  amount  of  their  deposits,  and  j£ 
per  cent,  annually  upon  the  average  amount  of  capital  not  invested  in 
U.  S.  bonds. 

Bank    Surplus. 

The  law  provides  that  a  surplus  fund  shall  be  accumulated,  by  set- 
ting aside,  before  the  usual  semi-annual  dividend  is  declared,  one-tenth 
part  of  the  net  profits  of  the  bank  for  the  preceding  half-year,  until 
the  surplus  fund  shall  amount  to  20  per  cent,  of  its  capital  stock. 


Hints  and  Helps  for  Young  Business  Men. 


Business    Experience. 

It  is  stated  on  good  authority  that  ninety-seven  men  out  of  every 
hundred  who  engage  in  mercantile  life  either  fail  or  go  out  of  business 
with  greatly  reduced  resources.  The  statistics  of  New  York  City  give 
these  figures.  If  it  were  possible  for  business  men  to  use  the  experience 
of  others  the  number  of  failures  would  be  greatly  reduced.  The  only 
experience,  however,  that  is  really  worth  anything  to  us  is  our  own  ex- 
perience, and  as  a  general  rule  our  experience  is  valuable  only  in  pro- 
portion to  its  cost — not  so  much  its  cost  in  money,  as  its  cost  in  effort, 
and  worry,  and  trial,  and  hardship,  and  work.  Good  advice  and  in- 
telligent sense  can  never  take  the  place  of  actual  experience,  but  they 
may  reduce  very  largely  the  cost  of  experience,  and  with  this  idea  in 
view  the  hints  and  suggestions  given  under  the  heading  of  this  chapter 
are  offered  for  the  thoughtful  consideration  of  young  business  men. 


How   to   Succeed   as   a   Sal* 

Cultivate  a  memory  for  faces  and  names.  Remember  that  selling 
ability  depends  very  largely  upon  common  sense.  It  is  not  the  quan- 
tity but  the  quality  of  speech  which  .tells.  The  successful  salesman 
knows  how  to  talk,  what  to  talk  about,  and  more  especially  when  to 
stop  talking.  To  say  the  right  thing  at  the  right  time  is  not  nearly  so 
difficult  as  to  say  nothing  at  the  right  time.  The  seller  should  only 
talk  enough  to  keep  the  buyer  talking.  The  faculty  of  holding  trade, 
or  of  selling  repeatedly  to  the  same  people,  is  the  highest  attribute  in 
the  qualifications  of  a  successful  salesman.  Understand  thoroughly 
'S 


2l8  HINTS   AND   HELPS   FOR   YOUNG   BUSINESS   MEN. 

what  you  are  trying  to  sell.  Know  your  goods,  believe  in  them  your- 
self, and  you  are  sure  to  inspire  confidence  in  the  buyer.  If  a  salesman 
cannot  bring  himself  to  believe  in  himself,  his  house  and  his  goods,  he 
is  either  very  badly  placed,  or  he  has  mistaken  his  calling.  A  con- 
ceited, pretentious  and  affected  manner  disgusts  and  repels,  while  a 
person  whose  bearing  is  simple  and  natural  attracts  and  makes  friends. 
Remember  that  he  who  puts  another  in  the  attitude  of  being  a  teacher 
to  him  pays  him  a  delicate  compliment  which  is  generally  appreciated. 
A  good  salesman  seldom  asks  a  man  if  he  wants  to  buy  goods ;  he 
doesn't  come  at  him  that  way.  The  man  who  smilingly  assents  to 
everything  the  salesman  says  does  not  intend  to  buy  ;  he  is  framing  an 
excuse  for  himself.  The  eye  is  the  chief  medium  through  which  a  man 
fires  off  whatever  personal  magnetism  he  possesses.  One  who  really 
feels  good-will  may  often  infuse  it  into  the  heart  of  another  by  looking 
kindly  and  pleasantly  straight  into  his  eyes.  There  is  an  old  maxim  : 
"  When  you  buy,  keep  one  eye  on  the  goods,  the  other  on  the  seller; 
when  you  sell,  keep  both  eyes  on  the  buyer."  The  best  salesmen  of 
the  future  will  not  be  illiterate.  Education  informs  the  mind,  trains 
the  thinking  powers,  and  stamps  the  face  with  intelligence.  Activity 
is  not  necessarily  energy  or  industry.  A  Westerner  says  that  it  does 
not  matter  what  kind  of  tracks  you  leave  so  long  as  you  get  there.  This 
is  certainly  not  true  when  applied  to  salesmen.  There  are  cold,  bil- 
ious, disgruntled  people,  who  can  no  more  be  opened  out  by  politeness 
than  oysters.  Such  can  only  be  reached  through  their  self-interest. 
The  well-dressed  man  has  more  self-respect,  and  commands  more  than 
the  man  in  seedy  attire.  You  will  sell  more  goods  in  five  minutes  on 
a  bright,  busy  day,  when  the  store  is  full  of  customers,  than  in  an 
hour  on  a  rainy  day,  when  everything  is  dull  and  the  merchant 
gloomy.  Faithfulness  and  trustworthiness  are  more  valuable  than  in- 
telligence, for  they  are  very  much  harder  to  find  and  can't  be  bought. 
You  can't  frighten  common  sense  into  anybody,  or  bulldoze  trustworth- 
iness out  of  him.  Your  associates  should  be  pure  and  good,  and  your 
personal  habits  correct.  You  must  be  governed  by  sound  principles 
of  morality  and  religion,  without  which  no  true  success  can  be  at- 
tained. 

Failures   in   Early   Life. 

The  following  reference  to  the  secret  of  a  great  preacher's  success 
is  worthy  a  place  in  any  publication  intended  to  aid  young  business 
men.  The  preacher  is  not  any  more  called  to  preach  than  the  manu- 


HINTS   AND   HELPS   FOR   YOUNG   BUSINESS   MEN.  2 19 

facturer  is  called  to  make  shoes,  providing  of  course,  that  the  shoes  are 
made  to  wear  rather  than  to  sell.  Sermons  like  shoes  are  too  often 
intended  for  the  market  rather  than  for  the  individual.  It  came  out 
in  a  memorial  address  to  Philips  Brooks  that  his  first  attempt  in  real, 
practical  life  was  a  failure.  Immediately  after  his  graduation  from  col- 
lege, young  Brooks  obtained  a  position  as  usher  in  the  Boston  Latin 
School,  but  as  he  did  not  show  the  capacity  that  the  principal  of  the 
school  considered  necessary  in  undermasters,  his  resignation  was  de- 
manded. And  when  Brooks  at  once  turned  to  preparing  himself  for 
the  ministry,  the  school  principal  predicted  his  failure  on  the  ground 
that  he  had  never  known  any  one  to  succeed  in  anything  else  who 
failed  in  school-teaching.  If  that  schoolmaster  lived  twenty  years 
longer,  he  was  doubtless  willing  to  admit  that  he  had  made  a  mistake. 
And  yet  his  error  of  judgment  was  probably  fully  justified  by  the  lack 
of  power  Philips  Brooks  had  shown  up  to  the  time  he  left  the  Boston 
Latin  School.  The  capacity  that  this  schoolmaster  did  not  recognize, 
notwithstanding  his  long  acquaintance  with  young  men,  was  Brooks's 
sincere  trust  in  himself  and  his  willingness  to  persevere  and  work  out 
the  destiny  for  which  he  believed  nature  had  fitted  him.  If  he  had 
taken  the  school  principal's  opinion  as  final,  and  had  decided  that  he 
had  capacity  only  for  ordinary  things,  he  would  have  sunk  into  some 
obscure  place  and  the  world  would  have  lost  the  profit  of  one  of  the 
richest  natures  that  came  to  it  in  the  nineteenth  century. 

Philips  Brooks  persevered,  and  that  is  the  whole  secret  of  his  after 
success.  He  had  fixed  before  him  a  high  ideal  in  life,  and  he  held  to 
it.  He  refused  to  let  the  disappointment  of  a  first  essay  in  life  change 
his  plans  a  particle  or  influence  him  to  withdraw  his  gaze  from  the 
goal  he  had  in  view.  Young  as  he  was,  he  felt  that  the  world  could  be 
made  better  by  his  living  in  it  and  working  out  the  talent  with  which 
he  had  been  endowed.  Greater  than  the  capacity  he  displayed  as  a 
preacher  and  nobler  than  the  broad  and  generous  humanity  that  be- 
came so  conspicuous  in  his  life,  was  the  perseverance  he  showed  in 
clinging  to  his  purpose,  of  refusing  to  be  discouraged  by  his  first  disap- 
pointment and  by  the  doleful  predictions  of  friends. 

There  are  very  few  men  who  have  carved  out  their  own  lives  who 
will  not  admit  that  it  was  perseverance  in  the  time  of  failure  that  made 
them.  Courage,  steadiness  to  purpose  and  a  refusal  to  surrender  high 
ideals  at  s.ich  a  crisis  makes  it  the  turning  point  in  a  man's  life.  It  is 
said  of  the  English  that  they  have  won  in  many  decisive  battles,  when 
the  enemy  believed  themselves  the  conquerors,  simply  because  they  re- 


220  HINTS   AND   HELPS   FOR   YOUNG   BUSINESS   MEN. 

fused  to  acknowledge  that  they  were  beaten.  By  keeping  up  the  fight- 
ing they  convinced  the  enemy  that  it  was  they  who  were  beaten  and 
not  the  English,  and  the  history  of  the  world  shows  the  result  of  this 
perseverance.  It  is  the  same  with  men.  The  man  who  "  keeps  up  the 
fighting,"  no  matter  how  discouraging  the  circumstances,  is  sure  to  win 
in  the  end.  He  may  not  gain  all  he  hopes  for,  as  no  man  accomplishes 
that,  but  he  is  certain  to  gain  enough  to  compensate  for  his  efforts  and 
perseverance.  It  is  not  alone  to  himself  that  a  man  owes  this  duty  to 
persevere.  He  owes  it  as  much  or  more  to  mankind.  For  every  man 
who  elevates  himself  and  works  out  his  ideal  the  nation  is  the  richer 
and  mankind  the  better.  The  early  history  of  almost  every  successful 
man  is  a  history  of  early  difficulties  and  failures  overcome  by  large 
faith  and  constant  effort.  Now  and  then  one  gets  to  the  top  of  the 
ladder  as  a  result  of  a  happy  accident.  But,  as  a  rule,  especially  in 
this  land  of  ours  with  its  abundant  opportunities  for  all,  men  achieve  it 
by  doing  their  best  at  whatever  their  hands  find  to  do  while  yet  they 
are  unknown.  The  reason  why  so  many  on  the  lowest  round  of  the 
ladder  never  rise  much  higher  evidently  is,  that  they  aspire  eagerly  but 
neglect  to  work  thoroughly.  Men  yearn  mightily  to  be  rulers  over  many 
things,  but  in  the  meantime  place  stumbling-blocks  in  the  path  of  their 
own  hopes  by  being  unfaithful  to  the  few  things.  Thousands  of  men 
and  women  are  out  of  employment  and  yet  the  supply  of  first-class 
ability  of  whatever  sort,  be  it  to  sweep  a  room  or  preach  a  sermon,  is 
never  equal  to  the  demand. 

A   Poor   Man's    Chances* 

It  is  said  nowadays  that  poor  men  have  not  the  chances  that  they 
once  had.  There  is  no  doubt  about  the  fact  that  the  man  who  suc- 
ceeds in  the  twentieth  century  will  have  larger  ability  and  greater  faith 
and  stronger  purpose  than  had  the  successful  man  of  the  nineteenth 
century,  but  it  does  not  follow  that  he  will  require  more  money.  The 
poor  boy  has  ten  chances  to  secure  the  necessary  educational  training 
to  one  chance  offered  the  poor  boy  of  fifty  years  ago.  The  opportunity 
always  makes  the  man.  He  can  measure  up  to  the  requirements  if  he 
has  the  purpose  and  ability  to  do  so.  A  well-known  American  humor- 
ist puts  the  poor  man's  chances  in  a  very  favorable  light  as  follows: 
The  poor  man  takes  all  the  chances.  We  must  curtail  his  chances, 
and  give  the  rich  man  a  chance.  The  poor  man  has  crowded  the 
rich  man  out.  But  for  the  poor  man,  this  old  world  would  have 
cast  anchor  6,000  years  ago,  and  be  covered  with  moss  and  lichens 


HINTS  AND   HELPS   FOR  YOUNG   BUSINESS   MEN.  22! 

to-day,  like  a  United  States  man-of-war.  Edgar  Allan  Poe  was 
the  son  of  a  strolling  player;  George  Peabody  was  a  boy  in  a  small 
grocery;  Benjamin  Frankim,  the  printer,  was  the  son  of  a  tallow 
chandler;  John  Adams  was  the  son  of  a  poor  farmer;  Gifford,  the 
first  editor  of  the  Quarterly  Review,  was  a  common  sailor;  Ben 
Jonson,  rare  Ben  Jonson,  was  a  bricklayer;  the  father  of  Shakespeare 
couldn't  spell  and  couldn't  write  his  own  name;  neither  can  you; 
even  his  illustrious  son  couldn't  spell  it  twice  alike;  Robert  Burns  was 
a  child  of  poverty,  the  eldest  son  of  seven  children,  the  family  of  a 
poor  bankrupt;  John  Milton  was  the  son  of  a  scrivener;  Andrew 
Jackson  was  the  son  of  a  poor  Irishman  ;  Andrew  Johnson  was  a  tailor; 
Garfield  was  a  boy  of  all  work,  too  poor  even  to  have  a  regular  trade ; 
Grant  was  a  tanner;  Lincoln  a  keel  boatman  and  common  farm  hand ; 
and  the  Prince  of  Wales  is  the  son  of  a  queen.  It  is  his  misfortune, 
not  his  fault;  he  couldn't  help  it,  and  he  can't  help  it  now.  But  you 
see,  my  dear  boy,  that's  all  there  is  of  him;  he's  just  the  Prince  of 
Wales,  and  he's  only  that  because  he  can't  help  it.  Be  thankful,  my 
son,  that  you  weren't  born  a  prince;  be  glad  that  you  did  not  strike 
twelve  the  first  time.  If  there  is  a  patch  on  your  knee  and  your  elbows 
are  glossy,  there  is  some  hope  for  you,  but  never  again  let  me  hear  you 
say  that  the  poor  man  has  no  chance.  True,  a  poor  lawyer,  a  poor 
doctor,  a  poor  printer,  a  poor  workman  of  any  kind,  has  no  chance; 
he  deserves  to  have  none,  but  the  poor  man  monopolizes  about  all  the 
chances  there  are. 

Stick    to    a    Legitimate    Business. 

Well  directed  energy  and  enterprise  are  the  life  of  American  prog- 
ress, and  safety  lies  in  sticking  to  a  legitimate  business.  No  man — 
manufacturer,  trader,  banker — has  any  more  right  to  be  so  energetic 
and  enterprising  as  to  take  from  his  legitimate  business  the  capital  which 
it  requires  to  meet  an  emergency.  Apologies  are  made  for  firms  who 
have  failed,  by  recuiring  to  the  important  experiments  they  have  aided, 
and  the  unnumbered  fields  of  enterprise  where  they  have  freely  scattered 
their  money.  We  are  told  that  individual  losses  sustained  by  those  fail- 
ures are  as  nothing  compared  with  the  benefits  conferred  on  the  com- 
munity by  their  liberality  in  contributing  to  every  public  work.  There 
is  little  force  in  such  reasoning.  A  man's  relation  to  a  creditor  is  dif- 
ferent from  his  relation  to  the  public.  The  demands  of  the  one  are 
definite ;  the  claims  of  the  other  are  just  what  the  ambition  of  the  man 
may  make  them.  The  histories  of  successful  men  unite  in  exalting  the 


222  HINTS   AND    HELPS    FOR   YOUNG    BUSINESS    MEN. 

importance  of  sticking  to  a  legitimate  business.  Failures  are  too  often 
the  result  of  branching  out  into  fields  outside  of  one's  experience. 
The  more  a  business  man  spreads  himself  the  thinner  the  spread. 

A   Millionaire's    Pointers. 

Nothing  is  so  hard  as  to  make  a  fortune  dishonestly.  Things 
slowly  attained  are  long  retained.  Buy  nothing  unnecessary,  no  matter 
how  cheap.  Don't  overwork  to  gain  $200  and  then  spend  $500  in  re- 
gaining your  health.  Do  your  best  every  time,  even  in  small  matters. 
Incur  no  responsibility  which  you  cannot  meet  without  distress.  When 
you  open  one  hand  to  secure  a  new  customer,  be  sure  not  to  allow  an 
old  customer  to  escape  from  the  other  hand.  The  easiest  way  in  all 
the  world  to  get  a  dollar  is  to  earn  it.  When  you  seek  to  obtain  credit 
in  excess  of  the  amount  of  your  capital,  you  have  crossed  the  prudent 
line  which  divides  business  from  speculation.  Mr.  Depew  is  reported 
to  have  said  that  he  wouldn't  stay  awake  an  hour  any  night  to  make  a 
hundred  dollars  but  he  would  stay  awake  an  hour  every  night  for  a 
week  rather  than  lose  a  hundred  dollars.  Men  fail  because  they  lose 
money  not  because  they  are  unable  to  make  it.  Any  man  of  ordinary 
ability  can  make  money. 

Business    Location. 

In  retail  trade  the  location  is  a  very  important  matter,  Trade 
centers  around  centers.  People  do  not  like  to  go  out  of  their  way  to 
buy  things.  An  inferior  or  small  store  in  a  good  location  is  preferable 
in  every  way  to  a  fine  large  store  poorly  located.  Just  a  little  around 
the  corner  is  not  so  good  as  on  the  corner.  Two  or  three  steps  up  is 
not  so  good  as  on  a  level  with  the  sidewalk.  A  rent  of  $400  a  month 
on  the  main  street  may  look  high  compared  with  $40  a  month  three  or 
four  doors  from  the  main  street,  but  the  rent  is  only  ten  times  as  great 
and  there  may  be  twenty-five  shoppers  on  the  main  street  for  every  one 
that  passes  up  the  side  street.  A  Boston  dealer  made  money  enough  in 
a  little  three  angled  room  scarcely  big  enough  for  three  customers  at 
once  but  located  on  a  famous  corner,  to  build  one  of  the  largest  and 
finest  business  blocks  for  which  that  city  is  noted.  His  rent  was  $1500 
a  month  and  his  three-cornered  store  of  one- hundred  years'  standing 
wasn't  worth,  apart  from  the  lot,  as  much  as  a  good  suit  of  clothes. 
Larger  sales,  even  though  profits  are  smaller,  afford  opportunities  for 
closer  buying  and  nowadays  when  the  fixed  prices  of  manufacturers 
and  jobbers  are  blown  to  the  four  winds,  the  buyer  gets  the  best  bar- 


HINTS   AND   HELPS    FOR   YOUNG   BUSINESS   MEN.  223 

gain  who  can  buy  the  largest  quantity  upon  the  shortest  time.  In  fact, 
in  these  days  of  active  competition  when  profits  seem  reduced  in  so 
many  directions,  the  buying  of  the  goods  is  equally  important  with  the 
selling.  The  merchant  who  cannot  buy  to  advantage  might  as  well 
step  aside  and  let  the  large  dealer  have  the  trade.  The  old  maxim, 
" goods  well  bought  are  half  sold"  is  truer  to-day  than  ever  before. 
In  opening  up  a  new  business  wait,  if  necessary,  until  an  excellent  lo- 
cation can  be  secured.  This  is  one-half  the  secret  of  many  an  abund- 
ant success. 

Method    and   System. 

The  young  man  who  lacks  order  will  nineteen  times  out  of  twenty 
fail  of  success.  The  merchant  ought  to  cultivate  systematic  habits  in 
all  his  affairs.  If  it  is  known  among  his  clerks  and  employees  that  the 
same  hour  every  morning  will  find  him  in  his  store  or  counting-room, 
this  very  fact  will  infuse  punctuality  throughout  the  house.  The  work 
should  be  systematically  distributed  among  the  clerks  and  each  article 
of  goods  should  have  its  special  place,  convenient  of  access  and  ready 
to  handle.  If  there  are  crowds  of  customers  there  is  not  likely  to  be 
much  dust  on  the  goods  but  the  clerk  whose  time  is  not  full  and  who 
allows  the  dust  to  accumulate  should  be  bounced.  Every  moment  of 
his  time  should  be  used  either  in  selling  or  in  re-arranging  goods,  in 
scattering  dust,  or  in  soliciting  trade.  The  young  man  who  has  an  op- 
portunity to  work  and  who  doesn't  work  doesn't  deserve  success.  The 
change  system  should  be  so  complete  that  customers  will  not  be  kept 
waiting.  The  clerks  should  be  so  thoroughly  familiar  with  their  stock 
that  all  reasonable  questions  can  be  answered  promptly.  In  our  largest 
and  most  prosperous  business  houses  the  work  is  divided  and  sub-di- 
vided into  departments ;  a  man  is  placed  in  charge  of  each  special  line 
of  goods ;  he  is  under  instructions  to  see  that  his  stock  is  in  every  sense 
up-to-date ;  he  must  keep  to  the  front  such  articles  as  are  likely  to  at- 
tract custom ;  remnants  and  dead  stock  instead  of  being  put  out  of 
reach  on  a  top  shelf  are  carefully  sorted,  specially  bargain  marked,  and 
so  displayed  as  to  be  easily  worked  off.  Nearly  every  mercantile  fail- 
ure finds  about  half  the  stock  so  old  and  shop- worn  and  dusty  and  dead 
as  to  be  almost  unsalable  even  under  the  hammer.  Exercise  system  in 
buying.  The  successful  merchant  lets  novelties  alone  and  deals  in 
goods  which  he  knows  he  can  sell.  By  not  scattering  his  resources,  he 
can  buy  greater  quantities  and  at  better  figures.  And  above  all  things 
have  order  arid  system  in  the  counting-room,  in  the  k'eerjing  of  books, 


224  HINTS   AND    HELPS    FOR   YOUNG    BUSINESS    MEN. 

in  the  filing  of  papers,  in  the  payment  of  bills,  in  the  collection  of  ac- 
counts— in  everything  in  any  way  related  to  the  finances  of  the  busi- 
ness. 

The    Talent   of  Success. 

Longfellow  once  said  that  the  talent  of  success  is  nothing  more 
than  doing  what  you  can  do  well,  without  a  thought  of  fame.  Man 
was  made  for  action  and  life  is  simply  a  field  for  brain  and  heart  exer- 
cise. We  owe  a  large  part  of  our  happiness  to  our  mistakes,  and  yet  it 
is  true  that  happiness  is  never  found  in  failure.  Don't  mistake  aspira- 
tion for  inspiration.  Ambition  without  genius  is  sure  to  end  in  failure. 
A  man  maybe  a  very  successful  lawyer,  though  he  might  fail  if  ap- 
pointed chief  justice ;  a  man  may  be  a  very  successful  teacher  but  en- 
tirely unfit  for  the  position  of  college  president.  It  is  a  mistake  to  say 
that  a  man  can  be  whatever  he  wills  to  be.  The  strongest  and  most 
constant  will  in  the  world  is  not  an  entire  substitute  for  brains.  All 
callings  are  alike  honorable  if  pursued  with  an  honorable  spirit.  A 
blacksmith  may  be  a  man  of  polished  manners  while  a  bank  president 
may  be  a  clown.  It  isn't  enough  to  say  that  if  a  young  man  will  only 
do  thus  and  so  he  may  reach  success.  The  power  of  patient  labor  is 
the  very  essence  of  genius.  What  a  man  does  is  the  real  test  of  what 
he  is,  and  to  intimate  that  a  certain  person  would  accomplish  great 
things  if  he  had  more  activity  of  mind  is  to  say  that  he  would  be 
stronger  if  he  had  more  strength.  All  experience  shows  that  it  is  the 
nature  of  genius  to  labor  patiently,  and  hence  it  is  easy  to  leap  to  the 
conclusion  that  genius  is  but  patient  labor.  Don't  run  away  with  the 
idea  that  will  can  do  the  work  of  intellect,  or  that  effort  can  take  the 
place  of  genius,  or  that  mere  intensity  of  desire  can  give  intensity  of 
power.  Great  deeds  are  done  by  great  men  and  often  without  effort. 
Neither  do  great  occasions  make  great  men.  They  bring  great  men  to 
the  front,  before  the  public  eye,  use  them,  but  do  not  make  them.  It 
is  more  often  that  great  men  make  great  occasions.  No  man  is  ever  a 
great  man  who  wants  to  be  one.  Shakespeare  wrote  for  money,  not 
fame.  Homer  sang  to  kindle  patriotism  in  the  hearts  of  his  country- 
men. Grant,  apart  from  his  work,  was  the  most  ordinary  man  in  a 
thousand.  However,  no  man  knows  what  are  his  powers,  whether  he 
is  capable  of  great  things  or  small,  until  he  has  tested  himself  by  ac- 
tual trial.  The  more  limited  your  powers  the  greater  need  of  effort. 
The  Spartan  youth  who  complained  to  his  mother  that  his  sword  was 
too  short,  was  told  to  add  a  step  to  it.  TQ  a  large  extent,  as  William 


HINTS  AND   HELPS   FOR   YOUNG   BUSINESS   MEN.  225 

Perm  declares,  "  industry  supplies  the  want  of  parts;  patience  and  dil- 
igence, like  faith,  remove  mountains."  "There  lives  not  a  man  on 
earth,  out  of  a  lunatic  asylum,"  says  Sir  Edward  Bulwer  Lytton,  and 
the  words  should  ring  in  every  young  man's  ears,  "  who  has  not  in  him 
the  power  to  do  good.  What  can  writers,  haranguers,  or  speculators 
do  more  than  that  ?  Have  you  ever  entered  a  cottage,  ever  traveled 
in  a  coach,  ever  talked  with  a  peasant  in  the  field,  or  loitered  with  a 
mechanic  at  the  loom,  and  not  found  that  each  of  those  men  had  a  tal 
ent  you  had  not,  knew  some  things  you  knew  not?  The  most  useless 
creature  that  ever  yawned  at  a  club,  or  counted  the  vermin  on  his  rags, 
under  the  suns  of  Calabria,  has  no  excuse  for  want  of  intellect.  What 
men  want  is,  not  talent,  it  is  purpose  ;  in  other  words,  not  the  power  to 
achieve,  but  the  will  to  labor."  Very  ordinary  ability  properly  made 
use  of  must  bring  a  certain  measure  of  success.  There  are  few  really 
great  men  while  there  are  thousands  of  really  great  things  to  be  done. 
Men  are  pushed  forward  by  events  over  which  they  have  no  control. 
They  never  know  their  own  power  until  it  is  measured  up  against  enor- 
mous obstacles.  Success  depends  more  upon  ability  adapted  to  work 
than  upon  any  superior  intellectual  power.  The  man  whose  ability 
best  fits  him  for  a  profession  might  be  a  failure  in  business  no  matter 
how  great  his  genius.  A  moderate  talent  well  applied  will  achieve 
more  useful  results,  and  impose  more  on  mankind,  than  minds  of  the 
highest  order,  whose  temper  is  too  fine  for  mechanical  or  industrial  pur- 
suits. Besides,  there  is  a  discretion  more  valuable  than  the  most  ex- 
tensive knowledge.  Men  must  have  tact  and  good  judgment  and  clear 
and  quick  perception.  Men  of  genuine  ability  are  rarely  idle.  To  al- 
low them  to  remain  so  is  to  allow  capital  which  might  pay  large  profits 
to  remain  uninvested.  Hold  your  ground  and  push  hard.  Watch  op- 
portunities. Be  rigidly  honest.  The  young  men  who  spend  their  even- 
ings smoking  cigarettes  and  telling  shady  stories,  with  the  street  corner 
for  their  location  and  packing  boxes  for  chairs,  need  not  spend  any 
time  learning  "  how  to  write  a  check  "  for  the  chances  are  a  thousand 
to  one  that  they  will  never  have  a  bank  account. 

Favoring    Circumstances    in    Life* 

We  meet  people  daily  who  are  so  profoundly  dull  that  they  seem 
to  be  experts  in  this  particular  qualification.  Dr.  Johnson  described 
one  of  these  persons  by  saying,  "  Why,  sir,  he  is  dull,  naturally  dull; 
but  it  must  have  taken  him  a  great  deal  of  pains  to  become  what  we 
now  see  him.  Such  an  excess  of  stupidity  is  not  in  nature."  There 


S26  HINTS   AND    HELPS    FOR    YOUNG    BUSINESS    MEN. 

is  no  such  thing  as  luck  in  the  ordinary  sense,  but  as  Shakespeare  has 
it,  "  There  is  a  divinity  that  shapes  our  ends,  rough-hew  them  how  we 
will."  There  is  no  doubt  about  the  matter  that  many  able  men  were 
"  born  to  blush  unseen,  and  waste  their  sweetness  on  the  desert  air." 
There  are  environments  and  circumstances  which  make  for  success 
and  if  we  fail  to  get  into  the  tide,  we  are  sure  of  failure.  True,  some 
men  seem  to  make  money  at  every  turn  and  without  apparent  effort 
while  others  with  the  most  careful  planning  and  closest  economy,  fail 
to  make  money.  The  sum  of  the  matter  is  that  success  depends  upon 
opportunity  as  well  as  upon  ability.  Men  pass  by  the  footpaths  which 
lead  to  larger  roads  leading*  to  great  commercial  routes  simply  because 
the  paths  run  up  hill,  and  seem  rough,  and  their  direction  is  unknown. 
The  tree  that  grows  soft  and  spongy  in  a  swamp  grows  hard  and  noble 
on  the  hillside.  "All  things  work  together  for  good,"  but  not  al- 
ways for  gain,  "to  those  who  love  God."  While  circumstances  may 
make  or  mar  a  man,  it  is  more  often  true  that  man  is  privileged  to  make 
his  own  circumstances.  The  race  is  not  always  to  the  swift  or  the  bat- 
tle to  the  strong.  Opportunity  is  coy.  The  careless,  the  slow,  the 
unobservant,  the  lazy,  fail  to  see  it,  or  clutch  at  it  when  it  is  gone. 
It  isn't  enough,  however,  to  strike  the  iron  when  it  is  hot,  we  must 
strike  it  till  we  make  it  hot.  It  is  an  interesting  fact  that  Wellington, 
who  never  lost  a  battle,  never  spoke  of  luck,  though  no  man  guarded 
more  carefully  against  all  possible  accidents,  or  was  prompter  to  turn 
to  account  the  ill-fortune  of  an  adversary.  Napoleon,  on  the  other 
hand  believed  in  his  star.  What  some  would  call  bad  luck  are  the 
very  discouraging  incidents  of  his  life  which  the  successful  man  uses 
for  his  own  advancement.  The  rungs  of  the  ladder  of  success  are 
made  of  failures  which  the  climber  puts  his  foot  on  to  reach  higher. 

Use    Every    Minute    of  Time. 

Gladstone  is  reported  to  have  said  "that  thrift  of  time  will  repay 
you  in  after-life  with  a  usury  of  profits  beyond  your  most  sanguine 
dreams,  and  that  the  waste  of  it  will  make  you  dwindle,  alike  in  intel- 
lectual and  in  moral  stature,  beyond  your  darkest  reckonings."  The 
young  business  man's  most  important  lesson  is  along  the  line  of  time 
economy.  Habits  of  indolence,  listlessness,  and  procrastination,  once 
firmly  fixed,  cannot  be  suddenly  thrown  off,  and  the  man  who  has 
"  wasted  the  precious  hours  of  life's  seed-time  finds  he  cannot  reap  a 
harvest  in  life's  autumn."  Go  hunt  out  the  men  in  any  community 
who  have  done  the  most  for  their  own  affd  the  general  good,  and  yo» 


HINTS. AND  HELPS  FOR  YOUNG  BUSINESS  MEtf.  227 

will  find  that  they  are  almost  uniformly  the  overworked  class,  the  almost- 
driven-to-death  men  who  seem  piled  all  over  with  work.  It  is  these 
men  who  are  most  active  in  public  affairs,  in  church  affairs,  and  in  all 
matters  concerning  the  public  good.  Men  of  this  class,  however 
crowded  with  business,  are  always  found  capable  of  doing  a  little  more, 
and  you  can  rely  upon  them  in  their  busiest  season  with  ten  times  more 
assurance  than  upon  the  idle  man.  Give  a  busy  man  five  minutes  to 
write  a  letter  and  he  will  dash  it  off  at  once ;  give  an  idle  man  a  day, 
and  he  will  postpone  it  till  to-morrow  or  next  week.  There  is  a  mo- 
mentum in  the  active  man  which  of  itself  almost  carries  him  to  the 
mark,  just  as  a  very  light  stroke  will  keep  a  hoop  agoing,  when  a  smart 
one  was  required  to  set  it  in  motion.  The  men  who  do  the  greatest 
things  in  this  world  have  the  genius  for  hard  work,  the  most  desirable 
kind  of  genius.  Most  persons,  to  achieve  anything,  need  to  be  always 
busy;  and  for  them  it  is  better  never  to  have  any  idle  moments,  but 
always  to  have  some  work  on  the  anvil  to  which  they  can  turn  their 
hand. 

Use    Money    Carefully. 

Don't  waste  your  breath  talking  about  money  being  a  great  evil. 
Men  will  make  any  kind  of  sacrifice  for  money.  Whatever  may  be 
said  about  the  dangers  of  riches,  ten  times  as  much  may  be  said  about 
the  dangers  of  poverty.  The  poor  man  is  hourly  beset  by  temptations 
which  the  rich  man  knows  nothing  of.  Poverty  is  a  condition  which 
no  man  should  accept  except  it  is  forced  upon  him.  It  is  the  want  of 
money  which  makes  men  workers.  It  is  this  scantiness  of  means,  this 
continual  deficiency,  this  constant  hitch,  this  perpetual  struggle  to  keep 
the  head  above  water  and  the  wolf  from  the  door,  that  keeps  society 
from  falling  to  pieces.  Money  is  desired  not  merely  for  the  comforts  it 
affords  but  for  the  influence  which  it  brings.  It  is  said  that  in  England 
no  man*  can  afford  to  have  an  opinion  who  has  not  an  income  of  two 
thousand  a  year.  An  anecdote  was  told  some  years  ago  of  two  men 
who  were  conversing  about  John  Jacob  Astor's  wealth.  The  one  asked 
the  other  if  he  would  be  willing  to  take  care  of  the  fifteen  millions 
merely  for  his  board  and  clothing?  "  No  !  "  was  the  indignant  an- 
swer, "  do  you  take  me  for  a  fool?  "  "  Well,"  said  the  other,  "  that's 
all  Astor  gets  for  the  job."  Let  every  one  who  would  get  on  in  the 
world  estimate  fairly  the  value  of  money.  Let  him  use  it  that  he  may 
personally  be  a  blessing  to  others.  To  work  hard,  to  improve  every 
moment,  to  economize,  to  avoid  debt — these  are  the  only  sure  steps  to 


228  HINTS  AND   HELPS   FOR   YOUNG   BUSINESS 


a  comfortable  old  age.  What  clerk  that  spends  twenty  cents  a  day  for 
a  couple  of  cigars,  dreams  that  by  this  expenditure,  with  the  accumu- 
lated interest,  he  will  in  fifty  years  have  smoked  away  $20,000?  Yet  a 
man  who  by  a  life  of  industry  had  laid  by  such  a  sum  would,  in  most 
country  towns,  be  deemed  rich.  No  amount  of  means  or  earnings  can 
justify  waste  by  a  nation  or  by  an  individual.  The  Great  Teacher,  when 
displaying  His  infinite  power  to  the  multitude,  taught  the  needful  lesson 
of  economy  by  asking  that  the  fragments  of  loaves  and  fishes  be  gath- 
ered that  nothing  be  lost. 

«l   Cheerful    Daily    Life. 

A  man's  daily  life  is  the  best  tesf  of  his  moral  and  social  state. 
Take  two  men,  for  instance,  both  working  at  the  same  trade  and  earn- 
ing the  same  money  ;  yet  how  different  they  may  be  as  respects  their 
actual  condition  !  The  one  looks  a  free  man  ;  the  other  a  slave.  The 
one  lives  in  a  snug  cottage;  the  other  in  a  mud  hovel,  The  one  has 
always  a  decent  coat  to  his  back  ;  the  other  is  in  rags.  The  children 
of  the  one  are  clean,  well-dressed,  and  at  school;  the  children  of  the 
other  are  dirty,  filthy,  and  often  in  the  gutter.  The  one  possesses  the 
ordinary  comforts  of  life,  as  well  as  many  of  its  pleasures  and  conven- 
iences —  perhaps  a  well-chosen  library  ;  the  other  has  few  of  the  comforts 
of  life,  certainly  no  pleasures,  enjoyments,  nor  books.  And  yet  these 
two  men  earn  the  same  wages.  What  is  the  cause  of  the  difference  be- 
tween them?  It  is  in  this:  The  one  man  is  intelligent  and  prudent; 
the  other  is  the  reverse.  The  one  denies  himself  for  the  benefit  of  his 
wife,  his  family,  and  his  home;  the  other  denies  himself  nothing,  but 
lives  under  the  tyranny  of  evil  habits.  The  one  is  a  sober  man,  and 
takes  pleasure  in  making  his  home  attractive  and  his  family  comfort- 
able ;  the  other  cares  nothing  for  his  home  an.d  family,  but  spends  the 
greater  part  of  his  earnings  in  the  gin-shop  or  the  public-house.  The 
one  man  looks  up;  the  other  looks  down.  The  standard  of  enjoyment 
of  the  one  is  high,  and  of  the  other  low.  The  one  man  likes  books, 
which  instruct  and  elevate  his  mind  ;  the  other  likes  drink,  which 
tends  to  lower  and  brutalize  him.  The  one  saves  his  money  ;  the  other 
wastes  it.  How  is  it  that  of  t  wo  men  working  in  the  same  field  or  in 
the  same  shop,  one  is  merry  as  a  lark;  always  cheerful,  well-clad,  and 
as  clean  as  his  work  will  allow  him  to  be;  comes  out  on  Sunday  morn- 
ings in  his  best  suit  to  go  to  church  with  his  family  ;  is  never  without  .a 
penny  in  his  purse,  and  has  something  besides  in  the  savings  bank;  is 
a  reader  of  books  and  a  subscriber  to  a  newspaper,  besides  taking  in 


HINTS    AND    HELPS    FOR   YOUNG    BUSINESS    MEN.  22p 

some  literary  journal  for  family  reading;  while  the  other  man,  with 
equal  or  even  superior  weekly  wages,  comes  to  work  in  the  mornings 
sour  and  sad  ;  is  always  full  of  grumbling ;  is  badly  clad  and  badly 
shod  ;  is  never  seen  out  of  his  house  on  Sundays  till  about  midday, 
when  he  appears  in  his  shirt-sleeves,  his  face  unwashed,  his  hair  un- 
kempt, his  eyes  bleared  and  bloodshot ;  his  children  left  to  run  about 
the  gutters,  with  no  one,  apparently,  to  care  for  them  ;  is  always  at  his 
last  coin,  except  on  Saturday  night,  and  then  he  has  a  long  score  of 
borrowings  to  repay;  belongs  to  no  club,  has  nothing  saved,  but  lives 
literally  from  hand  to  mouth  ;  reads  none,  thinks  none,  but  only  toils, 
eats,  drinks,  and  sleeps — why  is  it  that  there  is  so  remarkable  a  differ- 
ence between  these  two  men  ?  Simply  for  this  reason  .hat  the  one 
has  the  intelligence  and  the  art  to  extract  joy  and  happiness  from  life ; 
to  be  happy  himself,  and  to  make  those  about  him  happy ;  whereas  the 
other  has  not  cultivated  his  intelligence,  and  knows  nothing  whatever 
of  the  art  of  either  making  himself  or  his  family  happy.  With  the  one, 
life  is  a  scene  of  loving,  helping,  and  sympathizing ;  of  carefulness, 
forethought,  and  calculation  ;  of  reflection,  action  and  duty  :  with  the 
other,  -it  is  only  a  rough  scramble  for  meat  and  drink;  duty  is  not 
thought  of,  reflection  is  banished,  prudent  forethought  is  never  for  a 
moment  entertained. 

Character. 

Character  tells  in  all  conditions  of  life.  It  is  the  crown  and  glory 
of  life.  It  is  man's  noblest  possession,  constituting  a  rank  in  itself,  and 
an  estate  in  the  general  good-will;  dignifying  every  station,  and  exalt- 
ing every  position  in  society.  It  exercises  a  greater  power  than  wealth, 
and  secures  all  the  honor  without  the  jealousies  of  fame.  It  carries 
with  it  an  influence  which  always  tells;  for  it  is  the  result  of  proved 
honor,  rectitude,  and  consistency, — qualities  which,  perhaps  more  than 
any  other,  command  the  general  confidence  and  respect  of  mankind. 

Character  is  human  nature  in  its  best  form.  It  is  moral  order  em- 
bodied in  the  individual.  Men  of  character  are  not  only  the  con- 
science of  society,  but  in  every  well-governed  State  they  are  its  best 
motive  power  ;  for  it  is  moral  qualities  in  the  main  which  rule  the 
world.  Even  in  war,  Napoleon  said  the  moral  is  to  the  physical  as  ten 
to  one.  The  strength,  the  industry,  and  the  civilization  of  notions, — - 
all  depend  upon  individual  character ;  and  the  very  foundations  of  civil 
security  rest  upon  it.  Laws  and  institutions  are  but  its  outgrowth.  In 
the  just  balance  of  nature,  individuals,  nations,  and  races,  will  obtain 


230  HINTS  AND  HELPS   FOR  YOUNG  BUSINESS  MEN. 

lust  so  much  as  they  deserve,  and  no  more.  And  as  effect  finds  its 
cause,  so  surely  does  quality  of  character  amongst  a  people  produce  its 
befitting  results  Though  a  man  have  comparatively  little  culture, 
slender  abilities;  and  but  small  wealth,  yet,  if  his  character  be  of  ster- 
ling worth,  he  will  always  command  an  influence,  whether  it  be  in  the 
workshop,  the  counting-house,  the  mart,  or  the  senate.  Energy  of 
character  has  always  a  power  to  evoke  energy  in  others.  It  acts 
through  sympathy,  one  of  the  most  influential  of  human  agencies.  The 
zealous,  energetic  man  unconsciously  carries  others  along  with  him. 
His  example  is  contagious,  and  compels  imitation.  He  exercises  a  sort 
of  electric  power,  which  sends  a  thrill  through  every  fibre,  flows  into 
the  nature  of  those  about  him,  and  makes  them  give  out  sparks  of  fire. 
The  same  qualities  which  determine  the  character  of  individuals  also 
determine  the  character  of  nations.  Unless  they  are  high-minded, 
truthful,  honest,  virtuous,  and  courageous,  they  will  be  held  in  light  es- 
teem by  other  nations,  and  be  without  weight  in  the  world.  Character 
is  one  of  the  greatest  motive  powers  in  the  world.  In  its  noblest  em- 
bodiments, it  exemplifies  human  nature  in  its  highest  forms,  for  it  ex- 
bibits  man  at  his  best.  Although  genius  always  commands  admiration, 
character  most  secures  respect.  The  former  is  more  the  product  of 
brain-power,  the  latter  of  heart-power ;  and  in  the  long  run  it  is  the 
heart  that  rules  in  life.  Men  of  genius  stand  to  society  in  the  relation 
of  its  intellect,  as  men  of  character  of  its  conscience  ;  and  while  the 
former  are  admired,  the  latter  are  followed.  A  life  exclusively  occupied 
in  affairs  of  business  insensibly  tends  to  narrow  and  harden  the  charac- 
ter. It  is  mainly  occupied  with  self — watching  for  advantages  and 
guarding  against  sharp  practice  on  the  part  of  others.  Thus  the 
character  unconsciously  tends  to  grow  suspicious  and  ungenerous. 
Character  is  property.  It  is  the  noblest  of  possessions.  It  is  an  estate 
in  the  general  good-will  and  respect  of  men  ;  and  they  who  invest  in  it 
— though  they  may  not  become  rich  in  this  world's  goods — will  find 
their  reward  in  esteem  and  reputation  fairly  and  honorably  won.  And 
it  is  right  that  in  life  good  qualities  should  tell — that  industry,  virtue, 
and  goodness  should  rank  the  highest — and  that  the  really  best  men 
should  be  foremost.  The  best  sort  of  character  can  not  be  formed 
without  effort.  There  needs  the  exercise  of  constant  self- watch  fulness, 
self-discipline,  and  self-control.  There  may  be  much  faltering,  stum- 
bling, and  temporary  defeat;  difficulties  and  temptations  manifold  to 
be  battled  with  and  overcome ;  but  if  the  spirit  be  strong  and  the  heart 
be  upright,  no  one  need  despair  of  ultimate  success.  The  very  effort 


HINTS  AND  HELPS  FOR  YOUNG  BUSINESS  MEN.  231 

to  advance — to  arrive  at  a  higher  standard  of  character  than  we  have 
reached — is  inspiring  and  invigorating;  and  even  though  we  may  fall 
short  of  it,  we  can  not  fail  to  be  improved  by  every  honest  effort  made 
in  an  upward  direction.  Without  principles,  a  man  is  like  a  ship  with- 
out  rudder  or  compass,  left  to  drift  hither  and  thither  with  every  wind 
that  blows.  He  is  as  one  without  law,  or  rule,  or  order,  or  govern- 
ment. Integrity  of  word  and  deed  ought  to  be  the  very  corner-stone 
of  all  business  transactions.  To  the  tradesman,  the  merchant,  the 
manufacturer,  it  should  be  what  honor  is  to  the  soldier,  and  charity  to 
the  Christian.  In  the  humblest  calling  there  will  always  be  found 
scope  for  the  exercise  of  this  uprightness  of  character.  Hugh  Miller 
speaks  of  the  mason  with  whom  he  served  his  apprenticeship,  as  one 
who  "put  his  conscience  into  every  stone  he  laid."  Narrow-minded- 
ness in  living  and  in  dealing  is  generally  short-sighted,  and  leads  to 
failure.  The  penny  soul,  it  is  said,  never  came  to  twopence.  Gen- 
erosity and  liberality,  like  honesty,  prove  the  best  policy  after  all. 

A   Strong   Will. 

Egotism,  skepticism,  and  selfishness  are  always  miseraole  compan- 
ions in  life,  and  they  are  especially  unnatural  in  youth.  The  egotist  is  next 
door  to  a  fanatic.  Constantly  occupied  with  self,  he  has  no  thought  to 
spare  for  others.  He  refers  to  himself  in  all  things,  thinks  of  himself, 
and  studies  himself,  until  his  own  little  self  becomes  his  own  little  god. 
A  man  may  be  feeble  in  organization,  but,  blessed  with  a  happy  tem- 
perament, his  soul  may  be  great,  active,  noble,  and  sovereign.  Pro- 
fessor Tyndall  has  given  us  a  fine  picture  of  the  character  of  Faraday, 
and  of  his  self-denying  labors  in  the  cause  of  science, — exhibiting  him 
as  a  man  of  strong,  original,  and  even  fiery  nature,  and  yet  of  extreme 
tenderness  and  sensibility.  "Underneath  his  sweetness  and  gentle- 
ness," he  says,  "  was  the  heat  of  a  volcano.  He  was  a  man  of  excit- 
able and  fiery  nature ;  but,  through  high  self-discipline,  he  had  con- 
verted the  fire  into  a  central  glow  and  motive-power  of  life,  instead  of 
permitting  it  to  waste  itself  in  useless  passion."  A  strong  temper  is 
not  necessarily  a  bad  temper.  But  the  stronger  the  temper,  the  greater 
is  the  need  of  self-discipline  and  self-control  Doctor  Johnson  says 
•men  grow  better  as  they  grow  older,  and  improve  with  experience ;  but 
this  depends  upon  the  width  and  depth  and  generousness  of  their 
nature.  It  is  not  men's  faults  that  ruin  them  so  much  as  the  manner  in 
which  they  conduct  themselves  after  the  faults  have  been  committed. 
Th«  wise  will  profit  by  the  suffering  they  cause,  and  eschew  them  for 


232  HINTS   AND   HELPS   FOR   YOUNG   BUSINESS   MEN. 

the  future  ;  but  there  are  those  on  whom  experience  exerts  no  ripening 
influence,  and  who  only  grow  narrower  and  bitterer,  and  more  vicious 
with  time.  What  is  called  strong  temper  in  a  young  man,  often  indi- 
cates a  large  amount  of  unripe  energy,  which  will  expend  itself  in  use- 
ful work  if  the  road  be  fairly  opened  to  it.  There  are,  of  course, 
times  and  occasions  when  the  expression  of  indignation  is  not  only 
justifiable  but  necessary.  We  are  bound  to  be  indignant  at  falsehood, 
selfishness  and  cruelty.  A  man  of  true  feeling  fires  up  naturally  at 
baseness  or  meanness  of  any  sort,  even  in  cases  where  he  may  be  under 
no  obligation  to  speak  out.  Strong  temper  may  only  mean  a  strong  and 
excitable  will.  Uncontrolled,  it  displays  itself  in  fitful  outbreaks  of 
passion ;  but  controlled  and  held  in  subjection — like  steam  pent  up 
within  the  organized  mechanism  of  a  steam-engine,  the  use  of  which  is 
regulated  and  controlled  by  slide-valves  and  governors  and  levers — it 
may  become  a  source  of  energetic  power  and  usefulness.  Hence  some 
of  the  greatest  characters  in  history  have  been  of  strong  temper,  but  of 
equally  strong  determination  to  hold  their  motive-power  under  strict 
regulation  and  control. 


Letters  which  bring  Business,  and  How  to  write 

them. 


Kinds    of   Letters. 

The  primary  idea  of  a  letter  is  conversation  at  a  distance.  If  this 
be  kept  in  mind,  one  can  scarcely  fail  to  write  appropriately,  if  one  can 
converse  properly  ;  for  a  letter  may  be  familiar  or  reserved,  jocular  or 
dignified,  according  to  the  relations  between  the  writer  and  the  person 
addressed.  Letters  of  friendship  should  be  simple  and  natural.  It  is 
the  little  things,  the  incidents  of  every-day  life,  the  home-chat  which 
makes  a  friendship  letter  interesting.  Letters  of  courtesy  include  invi- 
tations, acceptances,  acknowledgements,  letters  of  congratulation,  of 
condolence,  of  introduction,  and  of  recommendation.  Letters  of  busi- 
ness include  all  correspondence  relating  to  business  matters.  Public 
letters  embrace  communications  to  newspapers  regarding  public  affairs. 
Frequently  a  writer  publishes  a  letter  addressed  to  some  prominent  per- 
son, criticising  his  opinions  or  actions,  or  putting  to  him  a  number  of 
formal  questions  witlv  the  purpose  of  receiving  a  published  reply.  This 
is  usually  called  an  open  letter. 

Arrangement   of  a   Letter. 

You  have  a  right  to  make  your  own  style  and  as  a  rule  the  more 
characteristic  it  is  of  yourself  the  better.  But  custom  has  established 
certain  forms  and  usages  for  business  and  social  correspondence  which 
it  is  generally  convenient  to  follow.  The  parts  of  a  letter  are  the  head- 
ing, the  address,  the  salutation,  the  body,  the  complimentary  close,  and 
the  signature.  This  is  a  good  form  for  the  beginning  of  a  letter.  It  is 


234  LETTERS   WHICH    BRING    BUSINESS, 

neat  and  compact  and  has  about  it  all  the  information  and  formality 
necessary.  Quite  often  we  see  letters  the  salutation  of  which  is  carried 
so  far  over  to  the  right  that  scarcely  any  room  is  left  for  the  first  line  of 
the  body  of  the  letter.  This  is  a  very  awkward  form  for  both  manu- 
script and  typewritten  letters  and  should  not  be  encouraged.  Bring  the 
"  My  dear  Sir  "  over  to  the  left  so  that  it  will  be  flush  with  the  "  Mr." 
and  one  space  from  the  left  end  of  the  second  line.  This  is  the  most 
approved  form,  and  it  is  certainly  the  neatest.  See  that  your  address 
at  the  top  is  full  and  complete.  Write  the  street,  or  the  P.  O.  Box,  or 
whatever  supplemental  address  is  necessary,  just  above  the  name  of 
your  post  office.  If  your  business  letter  is  to  a  married  woman,  say 
"My  dear  Madam"  instead  of  "  My  dear  Sir."  If  you  are  well  ac- 
quainted with  the  man,  drop  the  name  and  address,  and  write  simply, 
"  Dear  Mr.  Adair,"  or  if  a  woman,  write  "  Dear  Mrs.  Brown."  If  he 

100  S 


'1fVui 


is  younger  than  you,  either  in  years  or  experience,  or  even  if  he  is  on 
equality  and  is  a  warm  friend,  you  might  begin  "  My  dear  Mr.  Adair." 
Note  that  when  written  this  way  "  dear  "  is  not  written  with  a  capital. 
If  you  are  addressing  a  business  letter  to  a  young  lady  whom  you  do 
not  know,  simply  write  "Miss  Kate  Sanderson,"  and  begin  your  letter 
without  any  further  introduction.  If  you  are  acquainted,  either  form- 
ally or  if  your  names  are  familiar  one  to  the  other,  you  may  write 
"  Dear  Miss  Sanderson."  Of  course  when  written  in  this  way  there  is 
no  othsr  part  to  the  salutation  as  in  the  business  letter  addressed  to 
"  John  Adair,"  when  his  address  is  given.  Friendly  letters  to  men  or 
\>oys  may  begin  te  My  dear  Charley  "  or  "  My  dear  Brown."  The  old 
forms  "  Kind  friend  "  or  "  Dear  friend  "  are  a  good  deal  out  of  date. 
If  you  are  addressing  a  business  letter  to  a  firm,  write  "Gentlemen  " 
instead  of  "  My  dear  Sir."  Never  use  the  vulgar  contraction  "  Gents." 
Neatness  and  correctness  are  essential  in  all  correspondence.  There  is 


AND   HOW   TO   WRITE  THEM. 


235 


no  excuse  for  a  carelessly  written  letter.  There  are  towns  and  cities  in 
the  different  states  which  have  the  same  name.  In  writing  from  any 
such,  even  though  it  be  a  large  and  well-known  place,  be  careful  to  add 
the  name  of  the  state.  It  is  better  to  put  your  street  and  number  upon 
every  letter.  Your  correspondent  does  not  want  to  spend  an  hour  look- 
ing for  an  old  letter  containing  your  address.  Be  careful  not  to  crowd 
your  letter.  Leave  a  good  inch  at  the  top  of  the  sheet  perfectly  blank. 
Titles  should  not  be  omitted,  but  they  should  be  used  sparingly. 
"Mr."  is  good  enough  for  anybody  from  the  President  down.  Never 
put  on  a  title  at  each  end  of  a  name  or  more  than  one  at  either  end. 
The  salutation  of  letters  addressed  to  public  officers  should  be  quite 


rasBSBSESBsasasas  i  s  j  o  N    i* o s T A £,  "if NI v K  it  $  A  i,  ^sssssssssassSssss\ 


U  Jf  I'0,K    P  0  8  f  A I K  U  Jf  1 V  J5  H  8  E-L  J»  I 


formal,  if  the  letters  relate  to  public  affairs.  In  such  letters  the  ad- 
dress is  usually  put  at  the  close.  Keep  the  margins  of  your  letter  even. 
Do  not  make  many  paragraphs.  The  chopping  up  of  a  letter  into  para- 
graphs seems  to  be  about  all  that  the  average  amateur  typewriter  knows 
about  arrangement.  Make  a  new  paragraph  only  when  there  is  an  en- 
tire change  of  subject.  If  you  have  been  writing  about  the  death  of 
your  great  grandmother  and  have  finished  and  wish  to  say  something 
about  the  weather,  begin  with  a  new  paragraph.  When  a  new  para- 
graph is  necessary  it  should  begin  directly  on  a  line  with  the  first  word 
of  the  body  of  the  letter,  that  is,  one  space  in.  Learn  to  write  straight 
on  unruled  paper.  The  complimentary  close  follows  the  body  of  the 
letter,  and  immediately  precedes  the  signature.  The  closing  words 


LETTERS   WHICH    BRING    BUSINESS, 


should  not  be  more  familiar  than  the  salutation,  and,  like  the  words  of 
the  salutation,  they  depend  upon  the  relation  between  the  two  persons. 
"Respectfully  yours,"  "  Very  truly  yours,  ^  "  Yours  cordially,"  etc., 
are  the  usual  closing  words  of  formal  correspondence.  They  don't 


NSONE   POSTALS 

IMA  PER 

us  ^    -  v-jv^-QJOT.  1O.) 


C&Sf&**j*K  && 


mean  anything,  not  even  as  much  as  "Good  Day"  to  the  passer-by. 
A  man  will  write  a  letter  abusing  another  shamefully  and  then  sign 
himself  "  Very  truly  yours.'''  Letters  of  friendship,  of  course,  admit 
of  less  formal  terms.  The  first  word  only  of  the  complimentary  close 
should  begin  with  a  capital. 


AND    HOW   TO   WRITE   THEM. 


237 


The    Signature. 

Write  your  signature  plainly.     Your  friends  may  be  very  familiar 
with  your  dashing  ink  lines,  but  the  man  who  sees   your  name  for  the 


first  time  may  have  considerable  difficulty  in  transforming  it  correctly 
into  readable  script. 

Three    Important    Points. 

The  abbreviated  form  of  instant  is  inst.     In  correspondence  the 


/ 


~^^^ 

/    (7  / 


1.  Ha  3Tofi  cropOHt  KPOM*  a^peca  HO  RosBOJiaeTca  HBiero  Apyraro 

2.  Ho^TOBoe  ynpaB.ieuie  aa  co^epacanio  nncbsia  HO  OTB-feqaeTir. 


word  means  "present  month."  The  abbreviated  form  of  ultimo  is 
itlto.  or  ult.  In  correspondence  this  Latin  word  means  "  the  month  last 
past."  The  abbreviated  form  of  proximo  is prox.  In  correspondence 
this  Latin  word  means  "  next  month."  (?#  M<?  4th  prox.  would  mean 
on  the  fourth  of  next  month.  On  the  fth  ult.  means  on  the  seventh 
of  last  month. 


238  LETTERS   WHICH    BRING   BUSINESS, 


The    Envelope    Address. 

Thirty  thousand  misdirected  letters  reach  the  dead  letter  office  at 
Washington  daily.  The  public  need  to  be  educated  along  this  line. 
In  addressing  an  envelope,  write  first  the  name,  then  the  post  office, 


UNITED  STATES  COAST  AND  GEODETIC  SURVEY. 

WASHINGTON.  O.C.. .....  May .  8th   


Mr.'  Edwjn"L3 ilf rae  3 . 

Droxel  Instituted  Art,  Science  and  Industry., 
.Philadelphia,  Pa. 

Sir* 

In  compliance,  so  far  as  practicable,"  with  your,  re- 
quest oi'the  6th  inst.  I  sent  you  by  mail  yesterday,  free  of  charge 

•\ 
26  charts  of  canceled  editions,  unsuitable  for  navigation. 

A 

'Should  you  find  that  you  need  other  charts,  on  inspection  of 
the  catalogue  also  mailed  to  you  yesterday,  I  shall  be  pleased  to 
furnish  you  with  twenty  more,  f roe  of  charge,  which  please  select 
and  toention  by  catalogue  numbers  only.     If  you  nee;l  still  more, 
they*csn  be  purchased  through  our  agents  in  Philad<2),pivia,  Mesao**- 
Riges  &  Bro.,  #221  Walnut  Street, 

For  any  interior  maps  not  noted  in  our  catalogue  I  would 

refer  you  to  the  U.  S.  Geological  Survey  and  for  thoso  of  the  Miss- 

i  ' 

issippi  River  and  Great  Lakes  to  the  Chief  of  Engineers,  U.  S.  A.., 

both  in  this  City. 

Respectfully  yours, 


Acting 


then  the  state.  If  additional  matter,  such  as  street,  or  box,  or  county, 
is  necessary,  put  it  at  the  lower  left-hand  corner.  Even  in  the  case  of 
large  cities,  it  is  necessary  to  write  the  name  of  the  state,  for  there  are 
in  the  United  States,  five  New  Yorks,  nine  Philadelphias,  and  twelve 
Bostons.  Be  particularly  careful  in  writing  the  abbreviations  of  states. 


AND   HOW   TO   WRITE   THEM.  239 

Thus  N.  Y.  may  easily  be  taken  for  N.  J. ;  Pa.  for  Va.  ;  Cal.  for  Col. ; 
Md.  for  Ind.  ;  Me.  for  Mo.  Mail  intended  for  people  who  will  be  in 
a  place  only  a  day  or  two  should  have  "  transient "  added  to  the  ad- 
dress to  distinguish  from  permanent  residents.  Write  in  the  upper  left- 
hand  corner  and  enclose  in  brackets.  Always  put  the  stamp  in  the 
upper  right-hand  corner.  Letters  to  be  registered  must  have  the  name 
and  address  of  the  sender  on  the  envelope.  Do  not  write  the  name  of 
the  county  where  the  postal  employees  always  look  for  the  name  of  the 
post  office.  Railway  mail  clerks  have  to  distribute  many  pieces  of 
mail  while  the  train  is  running  from  one  station  to  another,  and  must 
decide  to  what  place  to  send  a  letter  in  a  fraction  of  a  second.  When 


£^ 

Cr  " 


SALES  OFFICE;  303.  SOUTH   FOURTH   STREET. 
J.  OADKN  HOFFMAN, 


May.20,.X89». 


EDWYN  LEIBPREED.  Esq., 

rne  Orexel  institute,  Philadelphia; 
Dear  Sir:- 

W«  are  in  receipt  of  your  favor  of  this  date, requesting 
us  to  «end  you  a  parcel  of  samples  of  iron  and  steel,  in  different 
stages  of  manufacture.  t  have  no  doubt  our  people  would  "be  very 
glad  indeed,  to' send  you  such  samples  as  might  be  of  any  practical 


the  county  and  post  office  are  close  together,  the  clerk  is  almost  as  apt 
to  take  the  name  of  the  county  for  the  post  office  as  the  right  name. 
The  penmanship  should  be  distinct  and  legible,  and  the  address  neat 
and  elegant,  without  ornamentation.  Non-delivered  letters  are  re- 
turned to  the  writers  who  have  their  names  and  post  offices  printed  on 
the  upper  left-hand  corner.  A  little  more  care  in  the  matter  of  address- 
ing envelopes  would  save  much  labor,  and  the  government  much  ex- 
pense. 

What   Constitutes   a    Good   Letter? 

A  good  social  letter  is  one  which  has  an  abundance  of  goodness 
whether  the  news  be  sad  or  glad.     The  spelling  or  grammar  do  not 


240 


LETTERS    WHICH    BRING    BUSINESS, 


make  the  letter  any  more  than  the  clothes  make  the  man.  A  letter 
from  a  rich  uncle  stating  that  he  had  left  you  his  fortune  could  not 
very  well  be  considered  a  bad  letter  even  though  every  word  were 
spelled  wrong  and  the  penmanship  almost  illegible.  A  good  business 


'"    L 


i~Sfaf4,fiC/4X.    fa 


56.    Ru       MAIN  C56 
ROUSA1X 

Mtsse  Teleyr  LEWIS  Kpuivix 


C^    ''      ^ 


letter  is  one  which  does  business.  No  matter  how  neatly  or  correctly 
written,  if  it  fails  in  its  object  it  is  a  poor  letter.  The  traveler  who 
fails  to  sell  goods  is  a  poor  traveler  no  matter  how  business-like  his 
address  or  how  nobby  his  clothes. 


AND    HOW    TO    WRITE    THEM. 


241 


Ibe  JImusultmmn  lumamft  (Eantpanp. 


^TTLE  CREEK  Co7TM,l^a  COMPANY, 


242  LETTERS   WHICH   BRING   BUSINESS, 

The    Illustrations. 

A  few  illustrations  are  given  of  good  letter  forms.  The  one  on 
page  238  is  a  good  sample  of  an  official  letter  such  as  are  sent  from  the 
government  departments  at  Washington.  On  page  239  is  a  sample  of 
a  business  letter  showing  a  very  neat  letter-head  and  a  pleasing  arrange- 
ment of  type-written  matter.  On  page  240  is  given  a  foreign  acknowl- 
edgment of  the  payment  of  a  bill,  and  the  illustrations  on  pages  241  and 
250  show  some  very  neat  and  attractive  business  headings.  All  the 
illustrations  are  very  much  reduced  in  size. 

Choice    of   Language. 

The  ready  use  of  good  language  is  largely  the  result  of  practice  in 
writing  and  of  an  abundance  of  good  reading.  Prof.  Genung  in  one 
of  his  valuable  books  on  the  study  of  English  gives  a  few  rules  for  the 
choice  of  words  which  we  take  the  liberty  to  quote  :  i.  In  the  choice 
of  words,  let  the  paramount  consideration  be  exactness.  That  is,  seek 
to  say  precisely  what  the  thought  requires,  neither  more  nor  less.  This 
demands,  of  course,  close  scrutiny  of  meanings,  and  independence  of 
current  fashions  in  words.  2.  Seek  to  have  at  command  more  than 
one  expression  for  the  same  thing.  Not  that  several  forms  are  in  any 
case  to  be  employed ;  but  it  often  happens  that  if  the  writer  has  not 
thought  broadly  and  deeply  enough  to  have  more  than  one  expression 
for  his  idea,  the  one  that  he  has  will  be  meagre.  3.  Cultivate  the  habit 
of  observing  the  derivation  and  history  of  words.  A  word  whose  ety- 
mology is  known  defines  itself;  the  writer  feels  its  force  intuitively,  and 
need  not  depend  on  a  dictionary.  4.  Enlarge  your  vocabulary  by  dil- 
igent study  of  usage  in  the  best  writers.  The  true  meaning  of  words 
is  expressed  only  when  they  are  interwoven  with  other  words.  No  fine- 
ness of  usage  can  be  acquired  from  the  dictionary  alone.  5.  Do  not 
use  technical  terms  where  they  are  not  likely  to  be  understood.  6. 
Beware  of  fine  writing.  By  fine  writing  is  meant  the  use  of  preten- 
tious terms  for  trivial  ideas. 


EXAMINATION   EXERCISES. 

I.  Write  an  order  on  a  merchant  for  $25  worth  of  goods  to  be 
given  to  a  friend  whom  you  name  and  to  be  charged  to  your  account. 

a.  Write  a  due  bill  in  favor  of  a  carpenter  who  has  put  in  some 
shelving  valued  at  $20,  payable  in  goods  from  your  store. 

3.  Write  for  the  Old  Corner  Bookstore,  Boston,  a  letter  to  Dr. 
Adam  Anderson,  Troy  College,  Troy,  N.  Y.,  advising  of  the  shipment 
by  express  of  200  copies  of  Jenkin's  Philosophy.     State  that  owing  to 
unusual  demands,  the  last  edition  was  exhausted  very  quickly,  and  the 
order  was  delayed  for  the  second  edition,  which  was  received  only  this 
morning  from  the  bindery. 

4.  Write  an  application  for  a  position  which  you  are  satisfied  you 
are  able  to  fill. 

5.  In  an  invoice  which  you  have  received  from  a  wholesale  house, 
you  find,  after  you  have  honored  a  draft  for  the  face  of  the  invoice,  an 
error  in  addition  which  makes  the  charge  $15   too  much.     Write  a 
letter  to  the  wholesale  house  calling  their  attention  to  the  matter. 

6.  Write  a  letter  to  an  out-of-town  customer  who  is  very  much  be- 
hind with  his  payments,  asking  the  reason,  and  urging  an  early  settle- 
ment. 

7.  Write  a  letter  to  a  delinquent  customer,  enclosing  a  statement 
of  his  account  ($76.84)  and  calling  his  attention  to  the  same. 

8.  The  person  to  whom  you  have  written  has  given  your  letter  no 
attention.     Write  him  a  second  letter  more  pointed  than  the  first. 

9«  Put  yourself  in  the  debtor's  place,  and  write  a  suitable  reply  to 
the  foregoing,  enclosing  your  check  for  part  of  the  amount  due,  and 
asking  time  on  the  balance. 

10.  Write  an  order  on  Warden  &  Gerrow  for  $10  worth  of  grocer- 
ies to  be  given  to  "the  bearer,  Thomas  L.  Wilkinson,"  and  to  be 
charged  to  your  account. 

11.  Write  a  due  bill  in  favor  of  Donald  Robinson  for  $20,  payable 
in  goods  from  your  store. 

12.  Write  a  due  bill  in  favor  of  Miss  Harriet  Beecher  for  $25,  pay- 
able on  demand  in  cash. 

13.  Robert  Abercrombie  borrowed  of  Silas  Wiggins  $75,  payable 
on  demand  with  interest  at  8  per  cent.     Date  to-day.     Write  the  re- 
ceipt.    How  does  a  receipt  like  this  differ  from  a  note  ? 


244  LETTERS    WHICH    BRING    BUSINESS, 


14-  Write  a  receipt  for  money  paid  you  by  one  person  in  part  pay- 
ment of  an  account  which  is  due  you  by  another.  Date  to-day.  Sign 
your  own  name. 

15.  You  are  a  wholesale  commission  merchant  in  the  city.     Write 
an  advisory  letter  to  a  former  friend,  who  proposes  to  sell  his  farm  and 
invest  in  a  flour  and  feed  business. 

16.  You  are  a  teacher  in  a  public  school  in  Cleveland.     Write  a 
letter  to  the  Secretary  of  the  School  Board,  requesting  leave  of  absence 
for  two  months  on  account  of  ill  health. 

17.  An  old  school  friend  of  yours  has  attained  high  honors  at  the 
University.     Write  him  a  letter  of  congratulation. 

18.  You  are  ill  and  unable  to  go  to  business  this  morning.     Write 
a  note  to  your  employer,  giving  the  cause  of  your  absence,  and  one  to 
your  physician  requesting  his  attendance. 

19.  Write  a  letter  introducing  a  young  friend  of  yours  to  a  minister 
in  a  distant  city. 

20.  The  traveler  of  a  wholesale  firm  is  on  the  road.      Write  him  a 
letter  from  the  firm  relative  to  his  movements  from  this  date. 

21.  You  have  a  back  room  in  your  office,  which  you  will  rent  to  a 
gentleman  requiring  desk  accommodation.     Write  an  advertisement. 

22.  You  desire  a  position  as  teacher  in  a  public  school.     Write  a 
letter  to  the  School  Board,  stating  the  position  for  which  you  apply,  and 
stating  your  qualifications  and  experience. 

23.  You  are  the  senior  partner  of  a  firm.     Write  a  testimonial  for 
an  accountant  who  is  leaving  the  house,  stating  your  personal  apprecia- 
tion of  his  character  and  ability. 

24.  In  an  invoice  just  received  from  a  wholesale  dealer  you  find 
an  error  in  addition.     Write  a  letter  to  the  wholesale  dealer,  calling  his 
attention  to  the  matter. 

25.  As  corresponding  clerk  for  the  wholesale  dealer,  write  a  suita- 
ble reply  to  the  foregoing  letter. 

26.  One  of  your  salesmen   is  about  to  move  to  a  distant  city. 
Write  him  a  letter  of  recommendation. 

27.  You  are  corresponding  clerk  for  a  wholesale  firm,  who  have 
just  received  from  a  country  merchant  a  letter  ordering  goods  on  credit. 
Write  a  reply,  declining  to  open  an  account  and  giving  reasons.     Make 
it  very  polite. 


AND   HOW   TO   WRITE  THEM.  245 

28.  Write  a  letter  to  a  wholesale  house,  acknowledging  the  receipt 
of  part  of  the  goods  which  you  ordered,  specifying  some  which  have 
not  arrived  and  some  which  are  not  equal  to  the  samples  shown  you  by 
their  traveler. 

29.  Write  a  letter  to  some  prominent  person  with  whom  you  are 
'acquainted,  or  have  been  employed,  asking  for  a  letter  of  recommenda- 
tion.    Write  a  letter  of  recommendation  for  a  young  man  seeking  em- 
ployment. 

30.  You  owe  your  hired  man,  Thomas  Kingsley,  eighteen  dollars, 
wages.     Write  him  an  order  on  G.  C.  Watson  &  Co.,  grocers,  for  the 
amount,  payable  in  groceries  from  their  store. 

31-  Your  spring  stock  of  dry  goods  has  just  arrived.  You  have 
many  season  novelties  and  a  great  variety  of  miscellaneous  articles. 
Write  five  short  reading  notices,  and  one  large  advertisement  intended 
for  your  town  newspaper,  announcing  the  character  and  prices  of  your 
merchandise. 

32.  You  have  received  a  monthly  statement  of  your  account  from 
a  general  merchant.  Write  him  a  letter,  enclosing  ten  dollars  to  apply 
on  account  and  requesting  time  on  the  balance.  Write  a  suitable  reply 
to  the  letter  you  have  just  written. 

33 •  There  have  been  some  changes  in  the  name  and  working  of 
the  firm  of  which  you  are  a  member.  Prepare  a  circular  letter  to  be 
sent  to  your  customers,  informing  them  of  the  changes  and  soliciting  a 
continuance  of  their  patronage. 

34«  Chas.  M.  Brown  &  Co.,  42  Tremont  Row,  Boston,  advertised 
for  a  young  man  to  assist  in  office  work,  and  out  of  fifty-five  replies  re- 
ceived, they  consider  Marshall  Maxwell's  the  one  most  likely  to  be  ap- 
proved. Maxwell  has  been  in  the  employ  of  Samuel  Smith  &  Co., 
Haymarket  Square,  and  of  the  Emerson  Manufacturing  Company,  43 
Devonshire  St.,  and  he  refers  Brown  &  Co.  to  each  of  his  previous  em- 
ployers. Brown  &  Co.  write  to  both  asking  them  to  tell  them  in  con- 
fidence all  they  can  about  Maxwell.  Write  (i)  the  advertisement,  (2) 
Maxwell's  application,  (3)  one  of  the  two  letters  of  inquiry,  (4)  a  fav- 
orable reply  to  the  letter  of  inquiry,  (5")  an  unfavorable  reply  to  the 
letter  of  inquiry. 

35.  Peter  Carter  Bros.  Company,  of  Lincoln,  Neb.,  owe  the  Ber- 
lin Cotton  Mills,  53  S.  Jersey  St.,  Trenton,  N-  J-,  an  account  of 
$396.45.  The  latter  concern  notifies  Carter  Bros.  Company  that  they 


246  LETTERS   WHICH   BRING   BUSINESS, 

will  draw  on  them  at  sight  in  ten  days,  and  that  they  shall  expect  the 
draft  to  be  honored.  Carter  Bros,  are  sure  they  cannot  meet  the  draft, 
notwithstanding  the  fact  that  the  account  is  long  overdue.  Their  own 
collections  have  been  slow  owing  to  the  business  depression  in  the  West. 
Act  for  Paul  Carter  and  write  a  letter  to  this  creditor,  stating  the  situa- 
tion fully  and  frankly,  enclosing  a  check  for  as  large  an  amount  as  pos- 
sible, and  asking  for  an  extension  of  time  on  the  balance.  Let  your 
letter  be  such  as  will  retain  the  confidence  of  your  creditor. 

36.  Answer  the  advertisement  below,  describing  the  sort  of  room 
you  wish,  stating  the  price  you  can  pay,  and  giving  the  name  of  conoe 
person  as  reference : 

BOARD. — A  few  boarders  can  be  accommo- 
dated with  a  small  family  in  desirable  part 
of  the  city.  References  exchanged.  Address: 
Mrs.  Emma  R.  Walker,  469  Grand  River  Ave. 

37*  John  Henry  Wood,  Box  735,  Providence,  R.  I.,  answers  the 
following  advertisement.  Mr.  Donaldson  replies,  giving  a  full  descrip- 
tion of  the  farm,  stating  price,  reasons  for  selling,  and  other  facts  which 
the  purchaser  may  wish  to  know.  Write  the  letter  for  Mr.  Donaldson. 

FOR  SALE. — A  farm  of  seventy-five  acres, 
fifty  acres  under  cultivation.  Near  market. 
Price  low.  Easy  terms.  For  full  particulars 
address  David  Donaldson,  Winthrop,  Mass. 

38.  Write  a  note  to  D.  T.  Ames  Company,  202  Broadway,  New 
York  City,  calling  their  attention  to  an  error  in  a  small  order  of  books 
which  you  received  from  them  to-day. 

39-  Prepare  a  deposit  slip  for  a  bank>  the  deposit  to  consist  of 
coin,  bank  notes,  express  orders,  local  and  out-of-town  checks. 

40.  An  associate  of  yours  has  done  you  a  great  injury  in  mistak- 
ing facts  regarding  your  character.  Write  him,  asking  an  explanation, 
and  demanding  a  full  reparation  of  the  wrong. 

41*  Baker  &  Jones,  246  William  St.,  New  York,  owe  you  $125. 
Write  them  a  brief  note,  stating  that  you  will  draw  on  them  for  the 
amount,  on  the  loth  of  the  following  month. 

42.  The  draft  drawn  on  Baker  &  Jones  has  been  returned  with  the 
word  "  refused"  written  on  the  back.  Write  them,  expressing  your 
surprise  and  asking  an  explanation. 

43'  Put  yourself  in  the  position  of  Baker  &  Jones'  accountant,  an4 
reply  to  the  letter  you  have  just  written. 


AND   HOW   TO   WRITE   THEM.  247 

44.  You  are  one  of  twenty-five  citizens  desiring  certain  improve- 
ments on  one  of  the  streets  of  your  town.  Draw  up  a  letter  to  the 
mayor  and  aldermen,  placing  the  matter  before  them  and  requesting 
their  attention  thereto. 

45^  You  are  a  teacher  and  desire  a  situation.  Write  to  a  school 
inspector  or  superintendent.  Ask  information  about  certain  vacancies, 
and  state  your  qualifications  and  the  salary  you  will  accept. 

46.  Prepare  a  circular  to  be  sent  out  to  all  customers  whose  ac- 
counts are  overdue,  requesting  them  to  pay  before  a  certain  day,  and 
notifying  them  of  a  proposed  change  in  the  management  of  your  busi- 
ness. 

47-  Charles  Henry  Bowlipp,  of  Fernwood,  Pa.,  owes  F.  A.  Black 
&  Son,  Philadelphia,  a  bill  of  $137.40  for  papering  and  decorating. 
The  bill  has  been  rendered  several  times  and  the  account  has  been 
standing  almost  a  year.  A  letter  comes  to-day  stating  that  the  bill  is 
in  excess  of  the  contract  price  which  was  $125.  This  statement  Black 
&  Son  find  to  be  correct,  but  they  find  also  that  Mr.  Bowlipp  ordered 
the  contract  arrangement  changed  with  reference  to  the  library,  adding 
instead  much  more  expensive  decoration.  This  change  besides  being 
more  expensive  caused  a  loss  of  time  of  two  whole  days  for  two  men. 
Write  for  Black  &  Son  a  courteous  reply  offering  a  full  explanation  and 
urging  immediate  settlement. 

48.'  You  have  a  house  which  you  desire  to  sell.  Write  an  adver- 
tisement describing  fully  your  property. 

49.  Write   a   receipt   for  a  month's  rent  received  from  Thomas 
Hardy  who  lives  in  your  house  at  246  Willow  Ave. 

50.  Write  three  short  reading  notices  of  your  goods,  to  be  printed 
in  the  local  column  of  your  village  paper. 

51.  Prepare  (for  printing)  a  circular  letter  to  be  sent  to  your  cus- 
tomers who  are  behind  with  their  payments.     Be  careful  to  word  it  in 
such  a  way  that  your  customers  will  not  take  offence. 

52.  Rule  off  a  square  on  your  paper  the  size  of  a  business  card,  and 
write  or  print  neatly  in  it  such  matter  as  you  think  would  make  a  suita- 
ble business  card  for  any  business  with  which  you  are  familiar. 

53»  For  what  do  the  following  abbreviations  stand  :  Prox.,  ultimo, 
i.  e.,  MSS.,  pro  tern.,  viz.,  ft  9 

54»  The  Delaware  Dairy  Company,  of  Darby,  Pa.,  owe  a  bill  of 


248  LETTERS    WHICH    BRING    BUSINESS, 


$93.20  to  Elias  Rogers,  of  Earlham,  Ind.,  for  three  new  patent  milk 
condensers  which  they  bought  from  him.  7  he  machines  give  excel- 
lent satisfaction.  They  desire  to  order  three  more,  but  wish  to  have 
Rogers  send  on  with  the  machines,  and  at  then  expense,  an  experienced 
man  who  can  put  them  up.  Write  the  letter  ordering  the  condensers 
and  enclosing  a  draft  for  the  amount  of  the  bill  already  due. 

55-  Write  a  letter  to  the  wholesale  dry  goods  house  of  Pancroft, 
Perth  &  Co.,  397  Madison  Ave.,  New  York  City,  ordering  five  pieces 
No.  2460  Black  Dress  Velvet,  four  pieces  No.  1263  Black  Satin,  thirteen 
pieces  No.  843  C.  L.  Gingham,  twelve  pieces  No.  924  Black  Dress 
Silk.  State  that  these  are  the  same  as  goods  ordered  through  their 
traveler  on  a  certain  date  (give  date)  last  year.  Ask  to  ship  by  Mer- 
chants' Dispatch  at  earliest  date.  Expect  usual  discount  and  time. 
Sign  the  letter  for  your  firm. 

56.  The  Wheeler  Manufacturing  Company  of  Courtland,  N.  Y., 
have  written  The  Richmond  Manufacturing  Company,  Richmond,  Va., 
ordering  500  sets  of  certain  mouldings  which  they  use  in  manufacturing 
carriages.  They  have  never  ordered  goods  from  "your  house  before  and 
ask  the  "usual  30  days'  credit."  You  find  them  well-rated  but  have 
not  in  stock  the  particular  moulding  which  they  describe.  You  have 
something  else  which  is  very  similar  and  which  may  answer  their  pur- 
pose. If  they  should  order  a  thousand  you  could  afford  to  manufacture 
what  their  order  calls  for.  Answer  fully  the  letter  for  the  Richmond 
house. 


ABBREVIATIONS.  Avoid  abbreviations  such  as  "&"  for  "  and," 
"  X  Roads"  for  "  Cross  Roads,"  "Bait."  for  "Baltimore,"  "Phil." 
for  "Philadelphia,"  "C'wood"  for  "  Collingwood,"  "  Wms'town " 
for  "  Williamstown,"  "  Jns'town  "  for  "Johnstown,"  "ad."  for  "adv." 
or  "advertisement,"  etc. 

ADDRESS.  Write  your  name  and  address  plainly  and  in  full. 
What  you  intended  for  "N.  Y."  may  look  to  the  corresponding  clerk 
who  reads  your  letter  like  "  N.  J."  Contractions  of  names  should  be 
made  distinct. 

ANONYMOUS  LETTERS.  No  gentleman  or  lady  ever  writes  an  anony- 
mous letter. 

BOTH  SIDES.  In  business  correspondence,  it  is  better  not  to  write 
on  both  sides  of  the  paper.  Letters  so  written  are  not  easily  trans* 
ferred  to  a  copying-book. 

BREVITY.  The  subject  matter  of  a  business  letter  should  be  stated 
as  briefly  as  is  possible  consistent  with  perfect  clearness.  Short  sentences 
and  words  are  preferable  to  long  ones. 

BUSINESS  LETTERS  should  be  clear,  brief,  direct  and  gentlemanly. 
Everything  irrelevant  to  the  business  in  hand  should  be  excluded.  If 
necessary,  reference  should  be  made  to  former  correspondence.  Every 
business  man  should  keep  an  exact  copy  of  all  business  letters  which  he 
mails.  Be  positive  and  determined  but  always  kind  and  generous. 

CAPTAIN.  When  this  title  is  used  instead  of  "Sir"  in  the  salu- 
tation or  complimentary  close,  it  should  not  be  abbreviated.  The  same 
rule  applies  to  "  Colonel "  and  other  titles. 

CARELESSNESS  in  spelling,  blunders  in  construction,  or  want  of 
taste  in  the  expression  of  thought,  often  interfere  with  success  in  the 
business  world.  The  business  character  of  a  man  is  judged  of  by 
strangers  from  his  correspondence. 

CONDOLENCE.  A  Letter  of  Condolence  is  a  letter  sympathising 
with  a  friend  who  has  suffered  loss  or  bereavement.  Great  care  should 
be  taken  in  the  writing  of  such  letters. 

COPYING  LETTERS,  Copies  of  all  letters  containing  matter  of  im- 
17  (249) 


250 


HINTS   FOR   CORRESPONDING   CLERKS. 


^e^-S^l^^TtJ^^mA^m^ 

^-^       /  /7 


JACKSONYILLE,S1AUGUST!NE&1ND1ANR1YERRAILWAY1 

''The  S'AuGustlric  fate.1' 


JDSEPH  RlCHARDSOK 

Cener?!  Passenger  Agent 


Betnrn  to  A.  E  MoLEA5, 

I  208  Sixth  8t,  EAST  LIVERPOOL,  Ohio, 

If  not  delivered  within  5  dart 


HINTS   FOR   CORRESPONDING   CLERKS.  251 

portance  should  be  preserved.     A  facsimile  made  with  a  letter  press  is 
a  most  satisfactory  means  of  preserving  a  copy  of  a  letter. 

CORPORATION.  A  petition  or  memorial  to  a  Board  of  Aldermen, 
or  other  officers,  may  begin  with  "Gentlemen,"  and  close  with  "All 
of  which  is  respectfully  submitted." 

DATE.  The  date  consists  of  the  month,  the  day  of  the  month,  and 
the  year.  It  is  not  necessary  to  write  the  forms  ist,  yth,  23d,  etc.;  the 
figures  are  sufficient.  Note  that  the  proper  contractions  of  the  ordinals 
ending  in  2  and  3  are  2d,  3d,  22d,  23d.  In  acknowledging  the  receipt 
of  a  business  letter,  give  the  date  of  it. 

DEAR  SIR.  This  saluation  is  more  intimate  than  "Sir,"  and  not 
so  officious.  It  is  preferable  to  "  Sir  "  for  ordinary  business  corres- 
pondence. 

DEGREES.  Scholastic  degrees — M.  D.,  D.  D.,  M.  A.,  A.  B.,etc., 
are  always  abbreviated  in  addresses.  Titular  addresses  of  high  rank, 
however,  such  as  President,  Governor,  Archbishop,  etc.,  should  never 
be  abbreviated  in  such  use.  It  is  not  in  good  taste  to  address  a  man  as 
"Mr.  Charles  King,  M.  A.,"  or  "Charles  King,  Esq.,  M.  D." 
Titles  are  multiplied  on  title-pages  and  catalogues,  but  not  more  than 
one  should  appear  on  letters.  "Esq.,"  as  an  honorary  title,  is  going 
into  disuse. 

DOCTOR.  Doctors  of  Divinity  may  be  addressed  "Rev.  Dr."  or 

«  Rev. ,  D.  D."  Doctors  of  Medicine  maybe  addressed  "A 

B ,  M.  D."  or  "Dr.  A. B ." 

DON'T.  Don't  write  illegibly.  Don't  write  crooked.  Don't  use 
red,  or  violet,  or  green  ink.  Don't  use  fancy  note  paper.  Don't 
place  a  "  bill  poster  "  advertisement  on  either  envelope  or  letter  paper. 
Don't  direct  an  envelope  wrong  side  up.  Don't  use  postals  for  private 
correspondence.  Don't  write  like  Horace  Greeley.  Don't  flourish. 
Don't  write  "  My  dear  Sir  "  with  a  capital  D  for  "  dear."  Don't  write 
"  &  "  for  "  and."  Don't  use  slang.  Don't  cross  your  letter.  Don't 
grumble  on  paper. 

DROP  LETTERS.  Drop  letters  require  postage  at  the  rate  of  two 
cents  for  each  ounce  or  fraction  thereof  at  letter-carrier  offices,  and  one 
>  cent  at  all  other  offices. 

ENVELOPES.  In  social  correspondence,  the  envelopes,  like  the 
paper,  should  be  white  and  plain,  and  should  correspond  to  the  paper 
used  in  sise  and  quality.  The  square  envelope  is  not  generally  used 


252  HINTS   FOR   CORRESPONDING   CLERKS. 

for  business  correspondence.     It  is  considered  bad  taste  to  use  colored 
paper. 

ERASURES.  Avoid  all  erasures  or  blots,  even  if  you  have  to  re- 
write your  letter.  Avoid  writing  with  a  pencil,  or  with  other  than 
black  ink. 

ESQUIRE.  The  correct  abbreviation  is  "Esq.,"  not  "Esqr."  or 
"  Ecq're."  In  addresses,  this  word  is  accepted  as  the  correct  title  of  a 
gentleman  who  has  no  professional  title.  It  is  decidedly  English,  how- 
ever, and  is  little  used  in  the  United  States. 

EUPHONY.  Avoid  the  frequent  repetition  of  the  same  word,  or  of 
similar  sounds.  Be  sparing  of  your  and"1  s,  and  verf  s,  and  so's.  The 
principal  words  of  a  sentence  should  be  placed  where  they  will  make 
the  most  impression. 

FIGURES.  Except  in  writing  dates  and  sums  of  money,  do  not  use 
figures  in  the  body  of  a  letter.  For  example,  it  would  be  considered 
an  error  to  write,  "  We  have  had  4  orders  for  this  article  already." 

FIRST-CLASS  MAIL.  This  includes  letters  and  all  other  written 
matter,  whether  sealed  or  unsealed,  and  all  matter  sealed  or  tied  in 
such  a  manner  that  it  cannot  be  easily  examined.  The  postage  is  two 
cents  per  ounce  or  fraction  thereof.  The  following  are  a  few  specified 
articles  among  those  subject  to  first-class  rates :  Accounts,  whether 
partly  or  wholly  in  writing.  Autograph  albums,  containing  writing  of 
any  kind.  Bank  books,  with  entries  in  writing.  Bank  checks,  when 
written,  whether  cancelled  or  not.  Contracts,  wholly  or  partly  in  writ- 
ing. Copies,  made  by  typewriter  or  caligraph,  or  other  similar  pro- 
cess. Copies  of  manuscript  for  publication,  when  not  accompanied  by 
proof-sheets  or  corrected  proofs  of  same.  Deeds,  wholliy  or  partly  in 
writing,  whether  executed  or  unexecuted.  Designs,  or  plans  drawn  or 
sketched  by  hand.  Diaries,  with  entries  in  writing  therein.  Drafts, 
wholly  or  partly  in  writing,  signed  or  unsigned,  cancelled  or  uncan- 
celled.  Envelopes,  with  written  addresses  thereon.  Insurance  poli- 
cies, wholly  or  partly  in  writing,  and  applications  therefor.  Invitations, 
wholly  or  partly  written.  Letters,  whether  written  or  printed  (except 
circulars),  and  whether  written  by  hand,  or  typewriter,  caligraph  or 
other  similar  process.  "  Old  letters,"  whether  sent  singly  or  in  a  bulk. 
Manuscript  matter,  maps,  music,  or  other  manuscript  designed  for  pub- 
lication, unless  accompanied  by  proof-sheets  or  corrected  proofs. 
Packages,  when  sealed  or  sewed  or  otherwise  closed  against  inspection. 
If  one  full  rate  be  paid  they  will  be  forwarded,  rated  up  with  the  defi- 


HINTS   FOR   CORRESPONDING   CLERKS. 


253 


cient  postage.  If  less  than  a  full  rate  be  paid,  the  package  will  be 
treated  as  a  short  paid  letter.  Printed  letters,  not  bearing  internal 
evidence  of  being  sent  to  several  persons  in  identical  terms.  Promis- 
sory notes,  wholly  or  partly  in  writing,  signed  or  unsigned.  Receipts, 
whether  wholly  or  partly  in  writing,  except  receipts  for  subscription  to, 
and  enclosed  with,  second-class  publications.  Stenographic  or  short- 
hand notes.  Telegrams,  when  offered  for  mailing  are  letters,  and  not 
to  be  receipted  fur  unless  registered.  Pictures,  Prints,  when  matter  is 
written  thereon  other  than  the  name  of  the  sender. 

FOLDING.  A  letter-sheet  should  be  folded  from  the  bottom  for- 
ward, bringing  the  lower  edge  near  the  top,  so  as  to  make  the  half 
length  a  little  shorter  than  the  envelope,  and  then  break  the  fold. 
Next  fold  twice  the  other  way,  beginning  at  the  left  edge,  folding 


towards  the  right.  Measure  these  folds  also,  so  as  to  fit  the  envelope. 
A  note-sheet  should  be  folded  twice,  from  the  bottom  forward.  When 
the  envelope  is  nearly  square,  a  single  fold  of  the  note-sheet  is  sufficient. 
If  you  want  to  make  a  good  letter  look  slovenly,  endeavor,  by  folding 
down  a  half  inch  at  each  end,  to  make  it  fit  an  envelope  an  inch  too 
short. 

FOURTH-CLASS  MAIL  embraces  all  kinds  of  mailable  merchandise 
not  included  in  other  classes.  The  rate  of  postage  is  one  cent  per 
ounce  or  fraction  thereof.  The  limit  of  weight  is  four  pounds. 

FRIENDSHIP.  Matters  of  friendship,  and  private  confidence, 
should  never  be  mentioned  in  business  communications. 

HASTY* REPLIES.  "  Many  preplexing  and  provoking  matters  arise 
in  the  correspondence  of  a  business  house,  and  a  judicious  corres- 
pondent will  be  constantly  on  his  guard  lest  he  write  something  in 


254  HINTS   FOR   CORRESPONDING   CLERKS. 

haste,  and  perhaps  in  anger,  that  he  would  afterward  deeply  regret.  It 
is  wise  to  consider  carefully  and  act  deliberately.  When  constrained 
to  write  severe  things,  the  letter  should  be  permitted  to  lie  overnight 
for  review  before  mailing.  If  this  be  done,  it  is  probable  that  the 
character  of  the  letter  will  be  changed  radically,  or  perhaps  it  will  remain 
unwritten.  Many  letters  which  would  seem  ample  provocation  for  a 
sharp  reply,  had  better  go  unanswered.  This  advice  is  especially  com- 
mended to  those  seeking  trade.  Kind  words  make  and  hold  friends* 
while  hasty  or  vindictive  words  alienate  friends  and  business." 

HOSTESS.  Be  sure  to  write  a  friend,  or  hostess,  after  making  a 
visit  at  her  house,  thanking  her  for  her  hospitality.  Don't  wait  for  a 
fortnight  before  doing  so. 

INITIALS.  Many  persons,  in  subscribing  their  name,  have  a  fancy 
for  giving  only  initials  of  their  first,  or  given  name ;  thus,  R.  King,  J. 
T.  Jones.  No  one  can  determine  from  these  signatures  whether  the 
writer  is  Reuben  or  Rebecca,  James  or  Juliet,  and  the  person  addressed 
who  is  often  a  stranger,  is  at  a  loss  whether  to  send  his  reply  to  Mr. 
King  or  Miss  King,  Mr.  Jones  or  Miss  Jones.  This  is  especially  the 
case  if  the  penmanship  has  the  appearance  of  a  lady's  hand. 

INTRODUCTION.  Letters  of  Introduction  are  used  to  introduce  one 
friend  to  another  who  lives  at  some  distance.  Do  not  give  a  letter  of 
introduction  to  any  one  with  whom  you  are  not  thoroughly  acquainted. 
Such  letters  are  generally  left  unsealed,  and  the  name  of  the  person  in- 
troduced should  be  written  on  the  lower  left-hand  corner  of  the  en- 
velope, in  order  that  the  persons  on  meeting,  may  greet  each  other 
without  embarrassment. 

INVITATIONS.  If  you  have  an  invitation  to  write,  write  it  as  you 
would  any  other  brief  note.  Let  it  show  in  its  big  heartedness  that 
you  mean  the  spirit  as  well  as  the  letter  of  your  invitation. 

JUNIOR.  The  abbreviation  of  this  word  is  ''Jr."  or  "  Jun."  Its 
place  is  immediately  after  the  name,  as  "  William  Brown,  Jr.,  Esq."  It 
never  takes  the  place  of  any  title.  The  same  rule  applies  to  Senior. 
Both  words  should  begin  with  capitals. 

LANGUAGE.  A  letter  is  but  a  talk  on  paper.  The  style  should  de- 
pend upon  the  terms  of  intimacy  existing  between  the  parties.  To 
superiors,  be  respectful ;  to  inferiors,  courteous  ;  to  friends,  familiar ; 
to  relations,  affectionate.  Write  as  you  are  in  the  habit  of  thinking  or 
speaking,  only  be  more  particular  in  the  selection  of  your  words  than  in 
conversation.  Short  sentences  are  most  suitable  for  business  corre- 


HINTS   FOR   CORRESPONDING   CLERKS.  255 

spondence.     In  social  correspondence,  do  not  be  afraid  to  write  about 
little  things.     Things  worth  talking  about  are  worth  writing  about. 

MATERIALS.  Use  the  best  stationery  you  can  afford,  and  see  that 
your  letter  paper  and  envelope  correspond  in  quality  and  color.  The 
size  of  the  letter  sheet  ordinarily  used  in  business,  is  either  what  is 
termed  note  size,  about  5  by  8  inches,  or  letter  size,  about  8  by  10 
inches. 

MESDAMES.  The  contraction  of  this  word  is  Mmes.  It  is  the 
plural  of  the  French  Madame,  and  is  used  in  English  as  the  plural  of 
Mistress  (Mrs.").  Any  number  of  spinsters  associated  in  a  business 
firm,  in  a  committee,  or  in  any  other  co-operative  body,  should  be  ad- 
dressed with  the  pro-title  " Misses"  ;  but  if  any  one  of  them  rejoices 
in  the  title  "  Mrs.,'7  then  the  pro-title  of  the  body  must  be  "  Mmes." 
The  salutation  in  any  case  should  be  "  Ladies." 

Miss.  In  youth  the  masculine  of  the  word  is  Master,  and  in 
adult  age  Mister  (Mr.).  This  word  in  any  form  should  never  be  used 
as  the  salutation  of  a  letter.  Not  like  Sir,  Madam,  and  General,  it 
cannot  be  used  alone.  In  addressing  a  young  lady,  one  must  know 
either  her  given  name  or  her  surname ;  and  with  these  one  may  say 
"Miss  Mary"  or  "Miss  Brown."  In  writing  to  strangers  a  woman 
should,  in  her  signature,  indicate  not  only  her  sex,  but  also  whether  she 
is  a  "Miss  "  or  a  "  Mrs." 

MISTAKES.  Five  million  mistakes  are  made  every  year  in  envelope 
addresses,  for  that  number  of  letters  go  astray.  A  Boston  publisher 
says  :  "A  dozen  times  a  day  we  search  for  the  name  of  the  post  office 
or  state,  in  the  postmaster's  stamp  on  the  envelope,  and  we  frequently 
receive  letters  without  any  signature  whatever.  Occasionally,"  he  says, 
"we  find  in  our  mail  an  envelope  containing  money  but  no  letter." 
The  experience  of  this  publisher  is  the  experience  of  every  publisher  in 
the  country.  Don't  make  mistakes. 

MISTER,  MESSRS.  The  plural  of  "Mr."  and  of  "Esquire,"  is 
"  Messrs."  This  is  a  contraction  of  the  French  Messieurs  (Gentle- 
men). We  say  "  Mr.  President,"  "Mr.  Speaker,"  "Mr.  Chairman," 
"  Mr.  Editor,"  etc. 

MISTRESS.  This,  the  pro-title  of  a  married  woman,  is  almost  al- 
ways used  in  the  abbreviated  form,  "  Mrs.,"  and  is  pronounced  misses. 
It  is  sometimes  coupled  with  a  husband's  title,  as  "  Mrs.  Dr.  Stone." 
This  use  is  convenient,  but  questionable. 

MONEY.     In  opening  letters  containing  money,  the  latter  should 


256  HINTS    FOR   CORRESPONDING    CLERKS. 

be  immediately  counted,  and  '.ne  sum  noted.     Acknowledge  the  re- 
ceipt of  money  promptly. 

NOTA  BENE.  The  abbreviation  is  N.  B.,  and  the  meaning  "  note 
specially."  This,  like  the  postcript,  follows  the  completed  letter. 

OFFICIALS.  In  letters  to  ordinary  officials,  it  is  customary  to  be- 
gin with  the  salutation  "  Sir,"  and  close  with  "  I  beg  to  remain  your 
obedient  servant,"  or  "  I  have  the  honor  to  be,  Sir,  your  obedient  ser- 
vant." 

OFFICIAL  LETTERS.     In  official  correspondence,  it  is  better  to  ad 
dress  the  office  than  the  officer,  as  "  To  the  Minister  of  Agriculture, 

etc.,   Sir,"   instead   of  "  To  the  Hon.  B K—    — ,  Minister  of 

Agriculture,  etc." 

OFFICIAL  TITLES.  In  strictly  official  letters,  it  is  proper  for  the 
writer  to  place  his  official  designation  after  or  below  his  signature,  thus 
forming  part  of  his  signature. 

ORDERS.  In  ordering  goods,  complete  directions  as  to  the 
method  of  shipment,  should  always  be  given.  In  advising  of  the  ship- 
ment of  goods,  say  "  Shipped  via  N.  Y.  C.  Merchants'  Despatch,"  01 
whatever  the  railway  and  transportation  company  may  be. 

ORDER  LETTERS.  In  ordering  goods  or  any  articles  state  explicitly 
the  amount,  kind,  etc.,  and  what  terms  wanted.  Always  state  the 
amount  of  money  you  send  and  how  you  send  it. 

PAGING.  If  the  letter  consists  of  more  than  one  sheet,  the  sheets 
should  be  arranged  in  order  and  paged  carefully. 

PAPER.  For  social  correspondence,  four-page  note  size  is  preferable. 
Business  men  generally  use  single  sheets  letter  size,  with  printed  busi- 
ness headings.  Use  plain  paper,  either  ruled  or  unruled.  The  paper 
should  be,  whether  letter  or  note  size,  the  best  that  the  writer  can  af- 
ford. Let  it  be  white,  or  with  the  faintest  tinge  possible  of  blue  or 
cream.  Unruled  paper  is  to  be  preferred.  The  names  of  the  various 
hinds  of  paper  in  general  use  are  Legal- cap,  Bill-paper,  Foolscap^ 
Letter-paper,  Commercial  note,  Note-paper  and  Billet. 

POSTAGE  STAMPS.  The  proper  place  for  the  stamp  is  at  the  top  of 
the  envelope  at  the  right  margin,  in  the  right-hand  upper  corner,  and 
above  the  address.  Put  on  as  many  stamps  as  the  weight  of  the  letter 
or  parcel  demands. 

POSTAL  CARDS.     There  is  no  need  of  salutation  or  complimentary 


HINTS    FOR   CORRESPONDING   CLERKS. 


close.     The  economy  that  resorts  to  cards  need  not  waste  time  and  two 
lines  on  mere  civilities. 

POSTSCRIPT.  The  abbreviation  P.  S.  is  usually  made  use  of.  The 
ordinary  use  of  the  post-script  is  to  add  some  after-thought  to  the  letter. 

P.  O.  Except  in  special  instances,  it  is  not  necessary  to  write  the 
letters  P.  O.  after  the  name  of  the  post  office.  The  letter,  if  it  reaches 
the  town,  is  not  likely  to  go  to  the  courthouse  or  jail. 

PROMPTNESS.  Be  prompt  in  answering  all  letters,  but  be  specially 
so  in  acknowledging  favors  and  in  business  correspondence. 

RECOMMENDATION.  "It  ought  to  be  the  pride  of  every  man  who 
writes  a  letter  of  recommendation  to  feel  that  his  letter  will  have  weight, 
because  it  is  known  that  he  recommends  only  the  deserving  and  the 
competent,  and  recommends  truthfully." 

RETURN  STAMP.  Letters  about  one's  own  affairs,  to  other  than 
intimate  friends,  requiring  an  answer,  should  always  enclose  a  stamp  to 
pay  return  postage. 

R.  S.  V.  P.  These  initials  stand  for  respondez  s'il  vous  piait, 
(answer,  if  you  please).  They  are  sometimes  written  at  the  lower  left- 
hand  corner  of  the  invitations. 

SALUTATION.  Do  not  be  familiar  or  presumptuous,  in  greeting  a 
person  who  is  older,  or  more  learned,  or  in  a  higher  position  than 
yourself. 

SECOND-CLASS  MAIL.  This  includes  all  newspapers  and  other 
periodical  publications  within  the  conditions  required  by  the  post  office 
department  and  which  will  be  furnished  by  any  postmaster  upon  appli- 
cation. The  postage  on  second-class  matter  when  mailed  from  the 
office  of  publication  is  one  cent  per  pound.  Any  person  can  mail  a 
newspaper  or  magazine  at  the  postage  rate  of  one  cent  for  four  ounces 
or  fraction  thereof. 

SIR.  This  title'  may  be  used  apart  from  the  name,  while  "Mr." 
must  go  with  the  name.  The  plural  is  "  Gentlemen,"  not  the  vulgar 
contraction  "  Gents."  "  Dear  Sirs  "  bears  the  same  relation  to  "  Gen- 
tlemen "  as  "Dear  Sir  "  does  to  "  Sir." 

SPECIAL  DELIVERY.  The  special  delivery  system  has  been  extended 
to  every  post  office  in  the  United  States,  and  embraces  every  class  of 
mail  matter.  The  special  delivery  stamp  must  be  added  in  addition  to 
the  regular  postage.  Registered  letters  containing  special  delivery 
stamps  are  entitled  to  immediate  delivery  by  messenger. 


258  HINTS   FOR   CORRESPONDING   CLERKS. 

SPECIAL  DIRECTIONS.  If  any  special  directions  are  required  in 
connection  with  the  envelope  address,  they  should  be  put  in  brackets  to 
indicate  that  they  are  not  part  of  the  address  proper. 

SPELLING.  It  is  the  fault  of  the  English  language  that  we  have  so 
many  "bad  spellers."  If  you  are  doubtful  of  a  word,  it  will  be  better 
to  look  it  up  rather  than  make  a  blot,  or  a  running  line,  where  the  let- 
ters are  questioned.  Careful  reading,  and  lots  of  it,  will  make  a  good 
speller. 

STAMPED  ENVELOPE.  Letters  aoout  one's  own  affairs,  when  re- 
quiring an  answer,  should  contain  a  stamp  or  a  stamped  envelope  for 
return  postage. 

STATES.  The  abbreviations  of  the  names  of  states  and  provinces 
should  be  written  with  great  care.  What  you  mean  to  be  Me.,  may 
easily  be  taken  for  Mo.,  and  what  you  are  sure  is  Md.,  may  be  read  Ind. 

STYLE.  Paragraph  and  punctuate  carefully.  Spell  correctly. 
Write  legibly  and  with  care.  Avoid  blots,  erasures,  and  interlinea- 
tions. Never  economize  in  paper  by  writing  cross  lines.  In  writing  to 
the  most  intimate  friend,  a  certain  degree  of  attention,  both  to  the  sub- 
ject and  the  style,  is  requisite  and  becoming.  It  is  no  more  than  we 
owe  both  to  ourselves  and  to  the  friend  with  whom  we  correspond.  A 
slovenly  and  negligent  manner  of  writing  is  a  disobliging  mark  of  want 
of  respect. 

THE  PRESIDENT.     The  preferred  form  of  addressing  the  President 

is,  Hon. ,  Executive  Mansion,    Washington,  D.  C.;  the 

saluation  is  simply  "  Dear  Sir  " 

THIRD-CLASS  MAIL  embraces  printed  books,  pamphlets,  circulars, 
engravings,  lithographs,  proof-sheets  and  manuscripts  accompanying 
the  same,  transient  newspapers,  and  in  general  all  miscellaneous  printed 
matter.  The  limit  of  weight  for  mail-matter  of  this  class  is  four 
pounds,  except  in  the  case  of  single  books  exceeding  that  weight.  The 
rate  of  postage  is  one  cent  per  two  ounces,  or  fraction  thereof.  Printed 
circulars  may  bear  the  date  of  mailing,  address  and  signature  in  writ- 
ing at  third-class  rates.  Reproditctions  from  originals  by  the  electric 
pen,  papyrograph,  etc.,  are  entitled  to  pass  in  the  mails  in  sealed  en- 
velope as  third-class  matter.  The  only  restrictions  upon  corrections  to 
proof-sheets  is  that  everything  written  must  be  part  of  the  publication 
and  not  contain  references  to  business  or  other  matters.  Photographs 
containing  no  writing  other  than  the  name  of  the  sender,  are  third-class 
matter.  A  circular  does  not  lose  its  character  as  such  when  the  date  or 


HINTS    FOR   CORRESPONDING    CLERKS.  259 

the  name  of  the  sender  is  written  thereon.  Packages  of  third-class 
matter  when  sent  in  bulk  to  postmasters  to  be  distributed  to  different 
persons,  must  be  prepaid  at  regular  rates. 

TITLES.  The  following  miscellaneous  titles  for  use  in  addressing 
letters  or  notes  of  invitation  cover  the  field  of  ordinary  subscriptions : 
His  Excellency  and  Mrs.  R.  B.  Hayes  ;  Governor  and  Mrs.  Geo.  B. 
McClellan  ;  Hon.  and  Mrs.  Jas.  G.  Blaine  ;  Sir  and  Lady  John  A. 
Macdonald;  Rev.  Dr.  and  Mrs.  T.  DeWitt  Talmage ;  Prof,  and 
Mrs.  F.  H.  Anderson  ;  Mr.  and  Mrs.  W.  H.  How  land. 

STYLE  IN  CORRESPONDENCE.  The  first  and  indispensable  quality 
of  a  good  style  is  clearness.  Generally  it  is  enough  if  the  writer  de- 
vote his  efforts  simply  to  being  understood.  Plainness  and  clearness 
are  the  foundations  upon  which  all  other  qualities  are  built.  Too  ex- 
clusive endeavor  after  precision  may  make  the  style  stiff  and  angular. 
It  is  always  unwise  to  impair  the  thought  for  the  sake  of  the  expression. 
To  the  quality  of  clearness  must  be  added  the  quality  of  force.  In  a 
letter  the  spirit  of  the  writer  should  show  itself.  The  strongest  thoughts 
find  brief  expression.  As  a  rule  the  language  which  simply  suggests  the 
thought  is  more  interesting  than  that  which  gives  it  full  expression. 


IN  GRAMMAR 


Plurals. 

Be  careful  in  writing  such  plurals  as  moneys,  journeys,  valleys, 
chimneys,  turkeys,  negroes,  calicoes,  buffaloes,  sons-in-law,  solos,  twos, 
quartos,  step:sons. 

Verbs    and   Numbers. 

Follow  plural  subjects  with  plural  verbs  ;  as,  we  were,  not  we  was; 
you  were,  not  you  was ;  they  are,  not  they  is ;  they  were,  not  they 
was ;  they  have,  not  they  has ;  they  write,  not  they  writes ;  the  men 
are,  not  is ;  the  children  were,  not  was ;  the  boys  have,  not  has ;  my 
sisters  write,  not  writes ;  they  are  the  boys  who  were  at  school.  Jen- 
nie and  Annie  were  schoolmates. 

To   Do;    to    See. 

These  two  verbs  give  considerable  trouble.  Their  principal  forms 
are,  do,  did,  done,  and  see,  saw,  seen.  The  second  forms,  did  and 
saw,  should  never  follow  is,  are,  was,  were,  have,  has,  or  had.  The 
third  forms,  done  and  seen,  should  always  follow  one  of  these  words 
expressed  or  understood ;  as,  I  did  the  work,  or  I  have  done  the  work, 
or  the  work  is  done.  I  saw  the  picture,  or  I  have  seen  the  picture,  or 
the  picture  was  seen. 

Verbs    in    General. 

The  rules  given  for  to  do  and  to  see  apply  alike  to  all  verbs.  Such 
expressions  as  have  came,  have  sang,  was  drove,  have  broke,  have  be- 
gan, have  knew,  is  froze,  have  gave,  knowed,  has  went,  has  give,  has 
rang,  have  ran,  were  took,  has  stole,  throwed,  have  mistook,  etc.,  are 
gross  errors  and  should  be  avoided. 

Possessives* 

The  possessive  of  nouns,  both  singular  and  plural,  is  formed  by 
adding  an  apostrophe  and  "  s  "  ('s)  ;  as,  The  man's  hat  is  on  the  table. 
The  children's  playground  is  behind  the  house.     When  a  plural  noun 
[260]  +^. 


SLIPS    IN   GRAMMAR   CORRECTED.  261 


ends  in  "s,"  only  the  apostrophe  (')  is  added;  as,  the  pupils'  lessons 
should  be  explained.  Birds'  nests  attract  boys.  The  apostrophe  is 
never  used  in  forming  the  possessive  of  pronouns. 

I,    Me,    He,    Him,    She,    Her. 

Many  persons  continually  make  mistakes  in  conversation  and  in 
correspondence  in  the  use  of  these  words.  The  following  are  exam- 
ples :  Let  you  and  /go  ;  say,  me.  He  is  as  good  as  me ;  say,  /.  She 
is  as  tall  as  him;  say,  he.  You  are  older  than  me ;  say,  /.  Nobody 
said  so  but  he ;  say,  but  him.  John  went  out  with  James  and  I;  say, 
and  me.  You  are  stronger  than  him;  say,  than  he.  Between  you  and 
//  say,  you  and  me.  He  gave  it  to  John  and  //  say,  and  me.  Your 
brother  was  with  Mrs.  Brown  and  //  say,  and  me.  He  sat  between 
him  and  //  say,  me.  Me  and  him  can  carry  it ;  say,  he  and  /.  Her 
and  her  sister  are  coming;  say,  she  and  her  sister.  Her  and  him  are 
the  same  age;  say,  she  and  he.  Was  it  her  ;  say,  she.  If  I  was  him ; 
say,  were  he. 

We,    Us,    They,    Them,    Who,    Whom. 

Errors  in  the  use  of  these  pronouns  are  frequent.  Us  boys  enjoy 
the  holidays  ;  say,  we  boys.  Who  is  it  for?  say,  whom.  Was  it  them  ? 
say,  they.  Who  did  he  choose;  say,  whom.  Who  did  the  mischief? 
Them  ;  say,  they.  Be  careful  who  you  trust ;  say,  whom. 

Comparison. 

Do  not  use  the  superlative  degree  where  only  two  things  are  com- 
pared ;  as,  he  is  the  best  of  the  two ;  say,  better.  Jennie  is  the  eldest 
of  my  two  sisters;  say,  elder.  Avoid  double  comparatives  and  double 
superlatives  ;  as,  A  more  healthier  location  cannot  be  found  ;  say,  more 
healthy.  He  took  the  most  pleasantest  route ;  say;  most  pleasant,  or 
pleasanter. 

Negatives. 

Do  not  use  two  negative  words  so  that  they  shall  contradict  each 
other;  as,  He  didn't  do  nothing;  say,  did  nothing,  or  didn't  do  any- 
thing. He  is  not  there,  I  don't  think ;  say,  I  think. 

Adverbs. 

Do  not  use  adverbs  for  adjectives,  nor  adjectives  for  adverbs ;  as, 
The  river  rises  rapid;  say,  rapidly.  He  does  his  work  slow  ;  say, 
slowly.  She  looks  charming,  not  charmingly ;  I  feel  bad  over  it,  not 
badly.  He  did  his  work  well,  not  good. 


262  SLIPS  IN  GRAMMAR  CORRECTED. 

Prepositions. 

The  needless  insertion  of  a  preposition  is  to  be  avoided,  as,  In 
what  latitude  is  Boston  in  ?  Care  must  be  taken  to  connect  preposi- 
tions with  appropriate  verbs  and  nouns;  as,  This  book  is  different  to 
that ;  say,  from  that.  I  was  followed  with  a  crowd  ;  say,  by  a  crowd. 
He  is  angry  at  his  father ;  say,  with  his  father. 

Collective    Nouns. 

When  the  idea  of  unity  is  prominent,  collective  nouns  take  singu- 
lar verbs ;  as,  The  fleet  was  under  orders  to  sail.  There  was  a  large 
crowd  in  the  building.  Your  committee  begs  leave  to  report.  When 
the  idea  of  plurality  is  prominent,  collective  nouns  take  plural  verbs; 
as,  The  public  are  requested  to  be  present. 

Shall,    Will. 

Will  expresses  the  will  or  pleasure  of  its  own  subject.  Shall  sub- 
ordinates the  will  of  its  subject  to  that  of  the  speaker.  "  We  will  go  " 
means  "  we  are  willing  to  go."  "  We  shallop"  means  "  we  have  de- 
cided upon  going."  Never  say  "  Will  I  do  so  and  so?  "  The  literal 
meaning  of  such  an  expression  would  be,  "Am  I  willing  to  do,  etc." 
Remember  that  will  always  expresses  willingness  rather  than  futurity 
when  it  has  a  personal  significance. 

Similar   Tense   Forms. 

Lie,  /ay,  lain;  /ay,  laid,  laid;  sit,  saf,  sat ;, flee,  fled,  fled;  fly, 
flew,  flown ;  flow,  flowed,  flowed ;  rise,  rose,  risen ;  raise,  raised, 
raised.  His  roommate  lies  in  bed  until  noon.  The  apples  lay  on  the 
ground  all  winter.  He  has  lain  on  the  floor  since  morning.  He  laid 
the  book  on  the  table.  I  have  sat  here  for  more  than  an  hour.  She 
set  her  pitcher  on  the  ground.  They  vr\\\flee  from  the  plague.  The 
river  has  overflowed  its  banks.  John  raised  the  flag. 

Errors   to   be   Avoided. 

Administer.     Blows  are  dealt.     Medicine  is  administered. 

Afraid.     Say  I  fear  it  will  rain,  not  I  am  afraid. 

Agriculturist.     Not  agriculturalist. 

Alike.     Do  not  couple  this  word  with  both. 

All  over.     Over  all  the  country,  not  all  over  the  country. 

Allow.     Do  not  say,  "  He  allows  he  will  do  it." 

Alone.     Distinguish  this  word  from  only. 

Amateur.     Not  necessarily  a  beginner. 

And.     Say  try  to  go,  not  try  and  go. 


SLIPS   IN   GRAMMAR   CORRECTED. 


Angry.     Say  angry  with  a  person  and  at  a  thing. 

Answer.     Answer  questions  ;  reply  to  assertions. 

Anticipate.     Distinguish  from  expect. 

As.     Say  not  that  I  know,  instead  of  not  as  I  know. 

At  all.     Superfluous  in  "  any  at  all" 

Atheneum.     Pronounce  ath-eh-nee-um.     Accent  3d  syllable. 

Asphalt.     Pronounce  ess-fahlt,  not  ash-fault. 

Awful.     A  thing  cannot  be  awful  pretty. 

Balance.     Not  to  be  used  for  rest  or  remainder. 

Beautifully.     Looked  beautiful,  not  beautifully. 

Beg.     Say  "  I  beg  leave  to  acknowledge." 

Belongs  to.     Do  not  use  for  is  a  member  of. 

Between.     Between  two  ;  among  more  than  two. 

Blacking.     This  word  is  not  blackening. 

Brakeman.     Not  brakesman. 

Certain.     Distinguish  from  sure. 

Character.     Distinguish  from  reputation. 

Deal.     Great  deal,  not  good  deal. 

Die  with.     Persons  die  of,  not  with  disease. 

Disremember.     Say  forget. 

Don't.     Say  he  doesn't  s\ng,  not  he  don  t  sing. 

Either.     Means  the  one  or  the  other  of  two. 

Either  alternative.     Alternative  means  choice. 

Equally  well.     Do  not  say  equally  as  well. 

Every.     Followed  by  a  verb  in  the  singular. 

Expect.     Refers  to  future  time. 

Fix.     Incorrectly  used  for  arrange  or  prepare. 

Folk.     Folk  implies  plurality  as  well  as  folks. 

Gent.     Never  use  this  contraction  of  gentlemen. 

Good.     "  It  looks  good."     Say  well. 

Got.     Omit  got  in  "  I  have  got  a  dollar." 

Granary.    There  is  no  such  word  asgrainaiy. 

Guess.     Do  not  use  this  word  for  suppose. 

Had  have.     Never  use  together. 

Hardly.     Do  not  use  with  don  t  and  can't. 

Healthy.      Distinguish  from  wholesome. 

Hundred.     Use  the  singular  form  with  numerals. 

Idea.     This  word  is  not  idea-r. 

Just.     Incorrect  in  the  sense  of  now. 

Learn.     To  receive  instruction.     See  teach. 

Less.     Relates  to  quantity  ;  fewer  to  number. 

Loan.     Lend  is  considered  a  better  word. 

May.     Distinguish  from  can. 

Near.     Do  not  use  in  the  sense  of  nearly. 

flew.     «•  A  pair  of  new  boots ; "  not  "  a  new  pair/* 


264  SLIPS   IN   GRAMMAR   CORRECTED. 

Nice.     Think  twice  before  using  this  word. 
None.     Contraction  of  no  one,  takes  singular. 
One.     Followed  by  one,  and  not  by  be. 
Otherwise  than.      Not  otherwise  but. 
Party.     Do  not  use  this  word  im  person. 
PerpettuJ.     Distinguish  from  continual. 
Portion.     Often  incorrectly  used  {Q\  part. 
Portion.     A  portion  is  a  part  set  aside. 
Posted.     Do  not  use  instead  of  informed. 
Prevalent.     Disti ng uish  from  preva iling. 
Promise.     Distinguish  from  assure. 
Propose.     Distinguish  frcrn  purpose. 
Prudence.     Distinguish  from  discretion. 
.    Quantity.     Things  measured  or  weighed. 
Real.     The  adverb  is  really ;  as,  really  good 
Remember.     Distinguish  from  recollect. 
Returned  back.     The  prefix  re  means  back. 
Seem.     Distinguish  from  appear. 
Settle.     To  settle  does  not  mean  to  pay. 
Shampoo.     Not  shampoon.     Shampooing. 
So,  such.     So  long  journeys,  not  such  long. 
Some  better.     Say  somewhat  better. 
Splendid.     Splendid  things  glitter. 
Stop.     We  stay  at  a  certain  hotel,  not  stop. 
Streamlet.     Do  not  use  with  little. 
Summon.     Summon  is  a  verb,  summons  a  noun. 
Teach.     To  give  instruction.     See  learn. 
Those  kind.     Say  that  kind.     Kindis  singular. 
Transpire.     Do  not  use  for  to  happen. 
Try.     We  make  an  experiment,  not  try. 
Vacation.     Distinguish  from  vocation. 
Widow  woman..      Woman  is  here  superfluous. 
Without.     Do  not  use  without  for  uniess. 
Year-old.     A  two-year-old  colt,  not  a  two-yean. 
Yours.     Never  close  letters  '";th  "  Yours,  etc** 


to  Sonrw- 

1T 


Bo    Good   for   Something. 

No  use  applying  for  a  situation  if  you  cannot  do  anything.  En- 
courage and  develop  some  one  talent  for  the  use  of  which  the  world 
offers  a  money  value.  The  man  who  can  do  almost  anything  fairly 
well  isn't  drawing  half  the  salary  of  the  roan  who  can  do  one  thing 
better  than  other  people. 

Never   be    Idle. 

If  you  are  out  of  work  and  can't  find  any,  go  and  help  some  poor 
fellow  who  has  more  than  he  can  carry.  Don't  consider  that  you  are 
doing  him  a  great  favor  either.  He  is  really  doing  you  the  favor.  For 
every  one  man  who  can't  find  work,  there  are  five  who  have  more  than 
they  can  do.  If  you  read  your  bible,  you  will  find  that  the  men  whom 
God  called  to  higher  work  were  not  standing  around  with  their  hands 
in  their  pockets  waiting  for  a  job. 

Never   Despair. 

You  can  do  almost  anything  you  make  up  your  mind  to  do,  and 
resolve  upon  doing,  willingly  and  earnestly.  Do  not  be  afraid  of 
pounding  persistently  at  one  thing,  even  if  people  do  call  you  a  crank. 

Get    at    Something. 

If  nothing  turns  up,  turn  something  up.  The  man  who  is  at  work 
has  ten  chances  to  get  a  better  place  for  one  chance  the  man  who  is  out 
of  work  has  to  get  anything  to  do.  If  the  place  isn't  good  enough  or 
the  pay  not  big  enough,  fill  the  place  chuck  full,  so  that  you  will  bulge 
over  a  little  where  people  can  see  you,  and  earn  every  cent  of  the  pay. 
The  people  who  are  most  tired  in  this  world  are  working  for  themselves 
and  not  for  the  good  of  others. 

Market    Overstocked. 

The  market  is  always  overstocked  with  middling  work  of  all  sorts, 
while  first-class  work  in  every  department  of  human  effort  is  always  so 
scarce  as  to  command  high  prices.  Every  employer  knows  that  when 
he  has  need  of  a  man  capable  of  really  first-class  work,  he  must  search 
diligently  for  him,  and  pay  him  a  high  price  when  he  is  found. 
18  1-265] 

I 


r<f 6  HOW  TO   EARN  AND  GET  A  GOOD   SITUATION. 

Life's    Failures. 

A  large  percentage  of  life's  failures  are  due  to  people's  persistent 
attempts  to  do  things  for  which  they  are  not  fitted.  A  blunder  of  this 
kind  at  the  outset  is  almost  sure  to  embarrass  one  through  life.  The 
trouble  comes  mostly  from  a  mistaken  notion  of  respectability.  One 
kind  of  labor  is  as  respectable  as  another  if  it  is  honest  labor  and  the 
world  demands  it.  However,  there  is  a  genuine  dignity  and  honor  in 
the  pursuit  of  callings  requiring  intellectual  strength  and  culture  or 
technical  knowledge  and  skill. 

The    Choice    of  a    Career. 

There  are  times  in  a  young  man's  life  when  he  is  beset  as  to  what 
he  shall  do  for  a  livelihood,  and  the  question  as  to  a  choice  of  what 
the  world  offers  is  a  very  important  one.  The  first  thing  to  notice  is 
that  educated  labor  is  nearly  always  in  demand.  The  men  who  are 
doing  the  longest  day's  work  for  the  smallest  daily  wages,  who  are  in  a 
sense  the  slaves  of  their  employers,  are  the  uneducated.  The  essential 
thing  is  to  have  an  object  in  life,  an  ideal  within  you  that  will  raise  the 
character  and  excellence  of  your  work.  About  the  most  unfortunate 
man  in  all  the  world,  next  to  the  man  who  has  nothing  to  do,  is  the 
man  who  is  working  simply  for  wages  or  salary  and  not  for  the  love  of 
the  work.  Successful  men  are  successful  in  spite  of  difficulties.  They 
owe  their  success  largely  to  the  fact  that  they  had  the  snap  and  persist- 
ence and  ambition  to  succeed.  They  learned  to  climb  mountains  by 
climbing  them.  Be  thorough.  Know  the  top  and  bottom,  inside  and 
outside,  cause,  cost,  and  effect,  and  both  ends  of  everything  you  are 
required  to  do  or  handle.  Watch  out  always  for  larger  and  better  op- 
portunities. Good  opportunities  exist  around  us  all  the  time,  which, 
if  promptly  seized  upon,  lead  to  fortune  and  reputation.  In  no  coun- 
try in  the  world  are  the  possibilities  of  a  successful  career  more  numer- 
ous than  in  the  United  States.  If  you  will  study  the  career  of  any 
great  man  you  will  find  that  it  was  the  opportunity  that  made  him. 
Inspiration  and  suggestion  frequently  come  from  sources  that  are  leas 
thought  of.  Grant  might  have  remained  a  tanner  in  Galena  if  his  op- 
portunity had  not  come  in  the  civil  war.  Sometimes  a  man  makes  or 
forces  the  opportunity,  but  usually  the  opportunity  forces  and  makes  the 
man.  Be  careful  to  choose  what  you  have  a  bent  for  but  when  you  are 
fully  started,  let  "this  one  thing  I  do"  be  your  business  motto. 
"  Keep  everlastingly  at  it."  Remember  what  Macaulay  said  :  "  The 
world  generally  gives  its  admiration,  not  to  the  man  who  does  what  no- 
body else  ever  attempts  to  do,  but  to  the  man  who  does  best  what  mul 
ritudes  do  well." 


HOW  TO   EARN  AND   GET  A  GOOD   SITUATION.  267 


Better   Chances. 

There  is  a  prevalent  belief  among  young  men  that  there  are  more 
and  better  chances  for  advancement  in  the  professions  and  in  commerce 
than  in  mechanical  pursuits.  Young  people  ponder  the  stories  of  men 
who,  beginning  as  office  boys,  have  become  chief  clerks,  junior  part- 
ners, and  ultimately  seniors  in  great  houses,  until  these  come  to  repre- 
sent, in  their  eyes,  the  ordinary  and  probable  course  of  affairs.  They 
forget  that  success  of  this  kind  can  come  to  but  one  man  in  two  or 
three  thousands,  and  that  when  it  does  come  it  is  the  result  of  some- 
thing more  than  mere  chance.  To  a  young  man  with  capital  in  re- 
serve, or  with  its  equivalent  in  influence,  or,  better  still,  with  extraor- 
dinary capacity,  a  clerkship  may  offer  a  reasonable  prospect  of  ultimate 
advancement,  but  without  one  or  another  of  these  conditions,  the 
chances  are  more  than  a  thousand  to  one  that  he  will  never  succeed  in 
making  more  than  a  bare  support  for  himself,  while  the  overcrowded 
condition  of  the  ranks  in  which  he  stands  makes  his  position  a  precari- 
ous one  always.  The  mechanic,  on  the  other  hand,  brings  a  definite 
skill  to  bear  upon  the  problem  of  money  making.  Only  those  who  are 
similarly  skilled  can  compete  with  him  for  employment.  His  skill  is  a 
positive  capital,  and  his  work  is  always  productive. 

Easy    Money    Getting. 

The  era  of  easy  money  getting  is  rapidly  passing  away.  In  trained 
ability  is  there  only  any  real  safety  from  want.  No  man  who  is  with- 
out a  thorough  knowledge  of  some  business  is  ever  safe.  The  work  of 
developing  our  country's  resources  is  only  fairly  begun,  but  it  is  so  well 
begun  that  only  skilled  labor  is  wanted  in  its  further  accomplishment. 
The  indifference  with  which  young  men  habitually  allow  themselves  to 
drift  listlessly  into  avocations  for  which  they  are  by  nature  unfit;  the 
confidence  with  which  they  trust  chance  to  do  for  them  that  which  they 
should  do  for  themselves;  and  the  blind  recklessness  with  which  they 
neglect  to  acquire  a  skill  that  may  serve  them  in  their  life  struggle,  is 
very  much  to  be  regretted.  Don't,  however,  wait  until  you  get  some- 
thing to  fit  you.  Better  get  at  something  that  doesn't  fit,  than  to  be 
idle.- 

Christian    Conditions. 

There  are  Christian  conditions  of  success  which  all  should  con- 
sider. The  merchant  who  is  honest  that  he  may  make  money  is  not 
honest  and  may  fail.  He  only  is  Christian  who  counts  honesty  of  more 
worth  than  money  or  fame.  No  matter  what  your  calling,  be  truly  true 


268  HOW  TO   EARN  AND   GET  A   GOOD   SITUATION. 

and  faithfully  faithful,  and  if  you  fail  in  the  "hundred-fold  now,  in 
this  time,"  it  will  be  abundantly  made  good  in  the  "  life  everlasting." 

Give    Good    Measure. 

The  bible  measure  is  "pressed  down,  shaken  together,  and  run- 
ning over."  This  doesn't  mean  seventeen  ounces  for  a  pound  or  thir- 
ty-seven inches  to  a  yard,  but  rather  good  measure  of  yourself — to  your 
work,  to  your  employer,  to  others — and  good  measure  will  be  returned 
in  due  time. 

Don't    Quit 

A  good  position  until  you  are  sure  of  a  better  one.  Remember 
that  the  very  best  positions  are  secured  through  promotions  and  not  by 
answering  advertisements.  The  boys  who  are  always  looking  for  nice, 
easy  positions  at  fat  salaries,  never  get  them. 

Don't    Try    Everything. 

The  applicant  who  answers  all  advertisements,  and  claims  ability 
to  fill  each  position,  will  stand  a  poor  chance  to  get  an  appointment. 
If  you  are  satisfied  that  you  can  fill  the  requirements,  put  forth  your 
best  facts  to  prove  it. 

Don't   Tell   Your   History. 

It  will  not  be  necessary  to  say  how  well  bred  or  how  well  educated 
you  are.  Show  this  by  the  moderation  of  your  statements,  the  concise- 
ness of  your  facts,  by  correct  spelling  and  good  grammar,  by  a  neat 
and  respectable  letter.  Write  such  a  letter  as  will  obtain  for  you  an 
interview,  and  your  manners  can  then  be  made  manifest. 

Use    Good   Stationery— 

Not  that  of  your  present  employer.  The  longer  you  have  been 
with  one  house  the  more  valuable  you  will  appear  to  a  new  one.  Don't 
enclose  postage  stamps  for  reply.  It  is  a  useless  expense.  If  your  let- 
ter is  the  one  chosen,  the  advertiser  will  spend  two  cents  to  see  you. 
Use  the  ordinary-shaped  business  envelope.  All  fancy  stationery  goes 
into  the  waste-basket  without  being  opened. 

Be    Frank    and    Sincere. 

Don't  waste  your  time  and  the  advertiser's  by  applying  for  a  posi- 
tion which  you  are  unable  to  fill.  An  office  boy  cannot  expect  to  get  a 
job  as  business  manager  of  a  large  corporation,  and  a  young  man  of 
twenty-five,  no  matter  how  smart  he  may  be,  will  not  be  chosen  as  a 
bank  president. 


-ear  TELEGRAPH 


Only  those  who  have  large  business  interests  can  form  an  idea  of 

the  enormous  amount  of  telegraphing  done  annually.  Perhaps  400,- 
000,000  messages  a  year  would  be  an  underestimate.  These  figures  in 
connection  with  the  fact  that  it  was  not  until  1850  that  the  telegraph 
came  into  general  use  make  a  very  remarkable  showing.  In  1866  the 
rate  for  a  ten-word  message  across  the  continent  was  $10,  with  77 


WESTERN  UNION  TELEGRAPH  C 

INCORPORATED 

2I.OOO  OFFICES  IN  AMERICA.          CABLE  SERVICE  TO  ALL  jftE  WO 

TM»  Cbmpany  TRANSMITS  and  DELIVERS  mwuncfi  only  on  conditions  limiting  Its  liability,  wUrti  haw  h 

• 
THOS.  T.  ECKERT.  Praaidgnt  «nd  General  tW&gbH 


RECEIVE          (03  State  BtreetOSTOH.  " 1895~ 


.<^//^_    sfoa*f 


W^cfc^P.^ti 


cents  for  each  additional  word.  The  Atlantic  cable  of  1866  charged 
$100  for  twenty  words.  Now  the  rate  is  25  cents  per  word.  It  usually 
takes  from  two  to  four  hours  to  send  a  cablegram  to  England  and  re- 
ceive a  reply.  If  there  were  no  overcrowding  of  wires,  no  changes, 
no  delays  from  other  messages  having  the  right-of-way,  a  message  might 
receive  a  reply  in  almost  as  many  minutes.  An  instance  is  given  of  a 
message  from  London  to  Teheran,  Persia,  sent  by  the  Prince  of  Wales, 

[269] 


The  "  want "  advertisement  calls  for  a  young  man  who  is  a  "  ready 
penman  and  quick  at  figures."  These  are  necessary  qualifications. 
Every  person  has  more  or  less  to  do  with  figures,  and  any  rule  likely 
to  lessen  labor  or  make  the  result  more  certain  should  be  received  with 
favor.  The  rules  presented  in  this  chapter  are  the  best  of  which  the 
author  has  any  knowledge. 

1.    How   to    add   rapidly. 

Write  the  numbers  in  vertical  lines.  Where  a  number  is  repeated 
several  times,  multiply  instead  of  adding.  In  adding  horizontally,  be- 
gin at  the  left,  since  the  eye  is  more  accustomed  to  moving  from  right 
to  left  than  left  to  right.  Think  of  results  and  not  of  numbers  them- 
selves. Thus,  do  not  say  3  and  4  are  7,  and  8  are  15,  and  9  are  24, 
etc. ;  but  7,  15,  24,  etc.  Make  combinations  of  10,  or  other  num- 
bers, as  often  as  possible,  and  add  them  as  single  numbers.  Thus  in 
adding 

5+4+3+8+2+3+1 +4+9+4+5+1+6" 

say,  5,  12,  22,  30,  39,  48,  55,  taking  each  group  at  a  glance  as  a  sin- 
gle number.  After  sufficient  experience  the  mind  grasps  the  figures 
almost  unconsciously,  and  the  result  is  reached  as  quickly  as  the  eye 
can  glance  along  the  line  with  attention.  Practice  a  half  hour  each 
day,  and  in  a  month  the  result  will  astonish  you. 


274  SHORT-CUTS   IN   FIGURES. 

2.   The    Cashier's    Method. 

This  rule  is  applicable  to  any  kind  of  exercise.     We  add  each 
column  separately,  putting  down  the  sura  to  the  right. 

$2354.21  2O 

362.45  28 

1 598.46          32 
9328.75         29 
4859.82        28 
8621.31        24 


$27125.00      $27125.00 

For  instance,  the  sum  of  the  numbers  in  the  first  column  is  20,  in 
the  second  28,  in  the  third  32,  and  so  on.  This  method  is  of  special 
value  to  bank  clerks  and  others  who  may  be  disturbed  while  adding 
very  large  amounts.  It  does  away  entirely  with  the  process  of  car- 
rying. 

3.  The    Cash    Boy's   Fractions. 

Suppose  it  is  necessary  to  find  the  sum  of  I  and  i,  or  any  other 
two  fractions  with  ones  for  numerators.     To  find  these  sums  add  the 
denominators,  4  and    5,  for  the  numerator  of  the 
answer,   and  multiply  them   for  the   denominator. 
To   subtract   them,  subtract  the   denominators   for 
the  numerator  of  the  answer,  and  multiply  them  for 
the  denominator.     This  rule  applies  to  all  similar  fractions,  and  is  well 
worth  remembering. 

4.  The   Excess   Rule. 

If  you  wish  to   multiply  any  two   numbers,  each  of  which  is  a 
little  larger  than  100,  you  will  find  this  rule  very  helpful :     Multiply 
the  excesses — that  is,  23  by  4 — and  put  down  the  pro- 
duct, 92,  two  places  to  the  right  as  in  the  illustration. 
1O4  Then  add  the  two  numbers,  104  and  123,  omitting  one 

12792    °^  ^ie  ones  at  t^ie  k^'     Carry  wnen  necessary.      Ap- 
ply this  rule  to  any  similar  numbers  such  as  112  by  106, 
or  122  by  105,  or  135  by  103. 

5.  The    Lightning    Calculator's   Rule. 

The  best  expert  cannot  add  a  column  of  ones  any  faster  than  you 
can.  It  may  be  worth  your  while  to  study  this  secret.  Teach*"* 


SHORT-CUTS   IN   FIGURES. 


275 


it  very  helpful  when  they  are  obliged  to  give  long  addition  exercises  to 
the  children  and  wish  to  be  saved  the  labor  of 
addition  themselves.  Note  that  the  second  line 
added  to  the  first  makes  nines,  except  at  the  right, 
where  two  figures  add  to  ten.  The  third  and 
fourth,  and  fifth  and  sixth  lines  of  figures  are  sim- 
ilar. The  two  last  rows  are  small  numbers  writ- 
ten down  at  random.  Now,  to  get  the  answer, 
begin  to  the  left  if  you  wish.  Write  down  3, 
which  is  the  number  of  "couplets"  of  figures 
above,  then  add  only  the  two  rows  at  the  bottom, 
saying  (mentally)  2  and  i  are  3,  3  and  2  are  5,  4 
and  3  are  7,  o  and  2  are  2,  2  and  i  are  3,  and  5  and  3  are  8.  This 
exercise  can  be  varied  greatly  by  writing  the  two,  or  three  or  four  lines 
at  the  bottom,  or  by  placing  one  of  these  lines  at  the  top  and  one  at 
the  bottom. 


324532 

675468 

253361 

746639 

1 23445 

876555 

123213 

234O25 

3357238 


6.   How  to   Prove   Addition   in   a   Minute. 

This  is  an  old  rule  in  a  new  dress.  It  is  certainly  a  novel  and 
practical  method  of  proving  addition.  It  is  really  a  modification  of 
the  old  method  of  casting  out  the  nines  t  which  is  familiar  to  every  one. 

324632=20=  2 
256398=33=  6 
546312=21=  3 
856659=39=12=3  ^  =34=7 
725733=27=  9 
334694=29=11=2 
446859=36=  9j 


3491287=34=7 


Add  the  figures  in  each  line.  The  first  adds  to  20  and  their  sum 
is  2.  The  second  adds  to  33  and  their  sum  is  6.  The  third  adds  to 
21  and  their  sum  is  3.  The  fourth  adds  to  39  and  their  sum  is  3,  and 
so  on.  In  each  case  keep  on  adding  until  you  have  reduced  the  line  to 
one  figure.  Now  find  the  sum  of  all  these  unitates.  You  will  get  34, 
and  the  sum  of  3  and  4  is  7.  In  this  way  you  reduce  the  whole  exam- 
ple to  a  unit.  Now  do  the  same  with  your  answer,  and  if  your  addi- 


SHORT-CUTS   IN   FIGURES. 


tion  is  correct  the  unitate  in  each  case  will  be  the  same.  Note  this 
example  : 

8943=24=61 
2586=21=3 
3472=  1  6=7  - 
5963=23=5  - 
3485=20=2 
2  1  57=1  5=6  J 

26606=20=2 

Very  little  practice  will  make  it  necessary  to  write  down  the  uni- 
fates.  They  can  easily  be  added  as  obtained. 

7.  The    Complement   Rule. 

We  have  already  learned  how  to  multiply  two  numbers,  each  of 
which  is  a  little  greater  than  100.  Now  take  two  numbers,  each  of 
which  is  a  little  less  than  100,  98  by  94  for  instance.  The  complement 
of  a  number  is  the  difference  between  the  unit  of  the  next  higher  order. 

Thus  the  complement  of  98   is  2  ; 

98  -  -  2  (Complement)     Of  94  is  6;  of  9s7  is  i3,  etc.  TO 

94  "  -  6  (Complement)       multiply  these  two  numbers,  multi- 
QOt|O  Pty  ^ie  complements,  2  and  6,  and 

place  the  product,  12,  in  the  answer. 

For  the  remaining  two  figures,  subtract  across,  either  the  2  from  the 
94,  leaving  92,  or  the  6  from  98,  leaving  92.  Apply  this  rule  to  as 
many  exercises  as  you  wish.  Try  the  following:  97X98;  99X96; 
94X89. 

8.  The   Nine-nine-nine   Rule. 

This  is  really  Rule  7  applied  to  larger  numbers.  Suppose  you 
wish  to  multiply  895  by  994.  As  in  Rule  No.  7,  write  the  comple- 
ments to  the  right.  Now  multiply  105  by  6  and  place  the  three  figures 
Af^-*  in  tne  product.  Then  to  get  the  remainder  of 
O»J5  •  "1  OO  the  product  subtract  either  the  105  from  the  994, 
994-"  6  or  the  6  from  the  895.  The  889  might  be  got  by 
addition.  If  you  add  895  and  994,  you  will  no- 
tice that  the  first  two  figures,  5  and  4,  give  the  9, 
then  9  and  9  are  18,  put  down  8  and  carry  one,  then  i  and  9  and  8 
are  18,  put  down  8  and  drop  the  one  entirely.  This  is  perhaps  easier 
than  subtracting. 


SHORT-CUTS   IN   FIGURES. 


9.  The    Salesman's    Rule. 

Suppose  you  want  to  find  the  value  of  128  yds.  at  75  cents. 
Now  to  find  the  value  of  any  number  of  yards  of  cloth  at  75  cents  a 
yard,  or  any  number  of  articles  at  75  cents  each,  deduct 
one-quarter  of  the  number  from  itself  and  call  the  re- 
mainder dollars.  At  one  dollar  a  yard  the  answer  would 
$I2&'}  then  at  75  cents  it  must  be  three-quarters  of 
this,  or  one-quarter  less.  At  87^  cents  deduct  one-eighth. 
At  66|  cents  deduct  one-third. 

10.  The    Lock-stitch    Rule. 

If  you  wish  to  multiply  any  number  by  IT,  you  will  find  this  rule 
very  helpful.  For  instance,  if  you  wish  to  multiply  23  by  n,  yon 
simply  add  the  2  and  3  together  and  place  the  sum  between  the  two 

origilial  %ures-     To  multiply  326,753  b7  "• 
Put    down    the    right    hand    figure,  3.     Then 

3594283      Sa^'  ^  an(^  •>  are  **'     ^ien»  5  anc*  7  are  12, 
put   down    2    and  carry  i.      Then,   i  and  7 

and  6  are  14,  put  down  4  and  carry  i.  Then,  i  and  6  and  2  are  9. 
Then,  2  and  3  are  5.  Then  write  the  left-hand  figure,  3.  This  is  a 
very  simple  method.  Try  a  few  exercises,  first  working  them  the  long 
way,  then  by  applying  this  short-cut. 

11.  The    Lowell    Rule.    No.    1. 

To  multiply  any  two  numbers  of  two  figures  each,  when  the  right- 
hand  figures  add  to  10  and  the  left-hand  figures  are  the  same  :  For  in- 
stance,  76  by  74.  Multiply  the  two  right-hand  figures,  6 
by  4,  placing  24  in  the  product,  then  carry  i,  and  multi- 
ply  7  by  8,  placing  56  in  the  product.  Always  carry  one, 
5624  adding  it  to  one  of  the  left-hand  figures.  Apply  this  rule 
to  any  similar  numbers,  such  as  24  by  26,  35  by  35,  27  by  23,  81  by 
89,  42  by  48. 

12.  The    Lowell   Rule.    No.   2. 

The  rule  explained  in   No.  n  can  be  applied  to  large  numbers. 

Take,  for  example,  298  by  292.  Here  the  left-hand  numbers  (29)  are 
tne  same,  and  the  right-hand  numbers  add  to  10.  Saj- 
twice  8  are  16,  and  put  down  both  figures.  Then  carry 
one  to  29,  and  you  have  30.  Now,  it  is  quite  easy  to 

R7O16  multipty  29  by  30  mentally.  The  product  is  870,  all  of 
which  is  placed  in  the  answer.  Apply  this  rule  to  104 

Vy  106,  112  by  118,  152  by  158,  127  by  123,  993  by  997. 


278  SHORT-CUTS   IN   FIGURES. 

13.  The   Square    Rule. 

To  multiply  numbers  such  as  37  by  43.  Here  the  mean  number 
— that  is,  the  number  which  is  as  much  greater  than  37  as 
it  is  less  than  43 — is  40.  Forty,  squared,  or  multiplied  by 
itself,  gives  1600.  The  square  of  3,  the  difference  between 
the  mean  number  and  one  of  the  numbers,  is  9.  1600 — 9 
=i59i=the  product  of  37  and  43.  Apply  this  rule  to  87 
by  73>  63  by  57,  22  by  18,  1009  by  991,  116  by  124.  The 
"J591  entire  work  should  be  done  mentally. 

14.  Rule    No.    4.    Extended. 

If  you  wish  to  multiply  two  large  numbers,  each  of  which  is  a 
little  over  1,000,  such  as  1,235  by  1,003,  proceed 
as  *n  Rule  No.  4.  Multiply  the  excesses,  that  is 
•  235  by  3,  carrying  the  product,  705,  three  places 
12387O5  to  the  right.  Then  add  the  numbers,  omitting 
one  of  the  ones  at  the  left.  Apply  this  rule  to  such  numbers  as  1,312 
by  1,003,  1,199  by  i>°°5»  etc- 

15.  Multiplication    "by    Subtraction. 

It  is  easier  for  most  people  to  subtract  than  to  multiply.  Instead 
of  multiplying  by  9,  we  multiply  by  10  and  subtract  the  number  from 
this  product. 

8435625X9=84356250 

8435625 

Product  =75920625 

To  multiply  by  99,  add  two  cyphers  and  subtract ;  to  multiply  by 
399,  add  three  ciphers  and  subtract,  etc. 

16.  From   an   English   Arithmetic. 

To  multiply  two  small  numbers,  each  of  which  ends  in  5,  such  as 
35  and  95,  take  the  product  of  3  and  9,  increase  this  by  one-half  of 
Jthe  sum  of  these  figures,  and  prefix  the  result  to  25.  Thus : 

35      5X5=25 

95      9X3=27,  27+*  (9+3)=33 

3325 

This  rule  will  be  found  to  hold  good  with  any  two  numbers  each 
of  which  end  with  5.  Apply  it  to  such  numbers  as  45  by  85,  35  by 
75,  95  by  45»  etc. 


SHORT-CUTS  IN  FIGURES.  279 

17.  The    Single    Line    Rule. 

In  multiplying  any  number  by  21,  or  31,  or  401,  or  any  number 
of  two  figures  where  the  last  is  one,  or  of  three  figures,  where  the  last 
two  figures  are  01,  a  good  deal  of  time  can  be  saved  by  abbreviating 
the  ordinary  process  as  here  illustrated.  For 
instance,  suppose  we  have  to  multiply  231,423  by 
462o46O  21.  Instead  of  putting  down  231,423  with  21 
under  it,  then  drawing  a  line,  multiplying  by  i, 
then  by  2  or  20,  then  adding,  as  is  the  ordinary 
custom;  all  that  is  necessary  is  simply  to  multiply  by  the  2,  placing 
the  product,  one  figure  to  the  left,  and  then  to  add.  Try  this  method, 
using  31,  51,  61,  91,  201,  3,001,  and  901  as  multipliers.  There  is  a 
saving  in  the  above  example  of  eight  figures. 

18.  How   Some   Accountants   Add. 

It  is  quite  common  with  accountants  to  put  down  both  figures,  as 
^^  in  the  illustration.  The  sum  of  the  first  col- 
26  umn  is  26;  carrying  2,  the  sum  of  the  second 
m^y  column  is  29  ;  carrying  2,  the  sum  of  the  third 
I  4  column  is  14;  carrying  i,  the  sum  of  the 
1  9  fourth  column  is  19,  and  the  total  is  19,496. 
r^ne  total  is  found  by  taking  the  19,  and  the 
right-hand  figures  of  the  other  three  partial 
sums.  There  is  an  advantage  in  this  method,  if  you  desire  to  go  back 
and  add  a  column  a  second  time. 

19.  English    Invoices    and   American    Money. 

Invoices  of  goods  bought  in  English  markets  are  in  pounds,  shillings  and  pence. 
The  money  items  have,  of  course,  to  be  changed  to  our  currency.  When  money 
is  at  par  value,  and  for  nearly  all  practical  purposes,  the  following  is  the  best  and 
shortest  method  of  reducing  English  money  to  dollars  and  cents.  This  rule  ap- 
peared originally  in  "  The  New  Arithmetic  "  by  the  author  of  this  publication.  It 
has  since  been  copied  into  several  text-books. 

Begin  by  reducing  the  shillings  and  pence  to  the  decimal  of  a  pound  as  fol- 
lows :  Write  one-half  of  the  greatest  even  number  of  shillings  as  tenths,  and  if 
there  be  an  odd  shilling,  write  Jive-hundredths  ;  reduce  the  pence  to  farthings  and 
•write  their  number  as  thousandths.  If  the  number  of  farthings  is  between  12  and 
36,  add  one  to  the  thousands  :  if  between  36  and  48,  add  two  to  the  thousandths. 

£3  14s  6d=£3.725 

NOTE.— Divide  14  by  a  and  put  down  7;  then  multiply  6  by  4  and  add  I, 
getting  25. 


280  SHORT-CUTS   IN    FIGURES. 

£4  15s  1Od=£4.7t2=£4.792 

The  pound  sterling  is  equal  to  $4.86f.  Now  80  is  |  of  400,  6| 
is  iV  of  80.  Then,  to  multiply  by  486^,  multiply  by  400  ;  divide  the 
product  by  5  and  place  the  quotient  under;  then  divide  the  quotient 
by  12,  and  place  the  second  quotient  under  the  first.  Add,  and  the 
sum  will  be  the  same  as  though  the  number  were  multiplied  by  4.86! 
in  the  ordinary  way. 

Find  the  value  of  ^3.725  in  dollars  and  cents. 

£3.725       £3.725X4.861=^ 


12 


-    -  Multiply   by   4    for    the    dollars.      Then 

•fr"*'""      divide  this  product  by  5,  which  is  equivalent 


2.980 
.248 


$18.128      ^3.725  by  .06] 


to   multiplying    ^£3.725    by  80;     then    divide 
2.98  by  12,  which  is  equivalent  to  multiplying 


20.  To    Multiply   by   21,    22,    23,    Etc. 

This  rule  applies  to  numbers  of  two   figures  each,  the  first  of 

which  ends  with  2.  Multiply  each  figure  in  the  multiplicand  by  the 
unit  figure  of  the  multiplier,  adding  to  each  sep- 
arate  product  double  the  figure  to  the  right  of  the 
one  multiplied  ;  add  the  tens  to  the  last  figure  dou- 
bled.  In  this  example  say  :  Three  twosr=6.  Three 
times  3  and  4  (2  doubled)  =  13.  Three  times  4 

and  6  and   i  to  carry=i9.     Three  times  2  and  8  and  i  to  carry=i5. 

Three  times  3  and  4  and  i  to  carry  =14.     Three  doubled  and  i  to 

carry  =  7.     Practise  this  method. 

21.  Adding    Backwards. 

-FO/IQO  1  Q  Q«                                     To  add  backwards, 

i  O^l«5^f  1  O  OO                                   begin  at  the  left-hand 

2345678  column,    and    write 

5432456  26                         down  the  full  amount 

721  4382  29                     of    each   column   in 

4  1  32O94  25                regular  order,  bring- 

6863213  38           ing    each    total   one 

342634O  34      place  to  the  right,  as 

2534538  _      in    the    illustration. 

39291914    39291914 


A  knowledge  of  this  method  serves  as  a  ready  and  reliable  proof  to 
the  accountant. 


SHORT-CUTS  IN   FIGURES.  28? 

fllSCELLANEOUS  SHORT-CUTS. 

22.  Rule  ii  applies  to  large  numbers  such  as  127  by  123,  or 
295  by  295.     By  adding  one  to  29  you  make  30,  and  it  is  an  easy  mat- 
ter to  multiply  29  by  30  mentally. 

23.  You  can  extend  the  multiplication  table  to  the  'teens  by 

the  following  rule :  To  one  of  the  numbers  add  the  units  figure  of  the 
other  and  affix  a  cipher ;  increase  this  result  by  the  product  of  the  two 
units  figures,  and  this  will  give  the  product  required. 

24.  You  can   prove   multiplication  by  the  method  given  on 
page  5  for  the  proof  of  addition.     Find  the  unitate  of  the  multiplicand 
and  multiply  this  by  the  unitate  of  the  multiplier.     The  product  should 
equal  the  unitate  of  your  product. 

25.  The  six  per  cent,  method  of  interest  is  very  simple.     It 
is  sometimes  called  the  6o-day  method.     To  find  the  interest  of  $248 
at  6  per  cent,  for  60  days,  you  simply  cut  off  two  figures  and  you  have 
the  answer,  $2.48.     For  30  days  the  interest  is  $1.24.     Then  multiply 
by  the  number  of  months  necessary.     For  3  days  grace  you  would  add 
one-tenth,  or   i2c.     For  7  per  cent,  add  one-sixth.     For  5  per  cent, 
deduct  one-sixth  ;  and  so  on. 

26.  Here  is  an  interest  rule  which  is  popular  with  some  book- 
keepers :  Multiply  the  principal  by  the  time  reduced  to  days;  then 
divide  this  product  by  the  quotient  obtained  by  dividing  360  bv  the 
per  cent,  of  interest. 

27.  Here  is  another  method  :  Reduce  the  time  to  months,  and 
to  the  number  thus  obtained  annex  one-third  of  the  days,  which  whole 
number  multiplied  by  one-half  of  the  principal  will  produce  the  re- 
quired interest  at  6  per  cent. 

28.  The  Detroit  rule  has  some  advantages :    Multiply  the  prin- 
cipal, days,  and  rate  together.     Suppose  this  product  to  be  16,380. 
Divide  by  5   and  we  get  3,276.     Divide  this  by  4  and  we  get  819. 
Divide  the  first  three  figures  of  3,276  by  5  and  we  get  65.     Now  add 
3,276,  819,  327,  and  65,  and  we  get  $4.487,  the  interest. 

29-  There  are  more  short-cuts  in  multiplication  than  in  any  other 
department.  If  you  want  to  multiply  by  427,  multiply  by  7  and  then 
by  42  which  is  6  times  the  product  by  7.  This  same  application  can 
be  made  in  hundreds  of  numbers  such  as  927,  279,  728,  287,  7291 
14,412,  81,273. 

19  r    ^ 


282  SHORT-CUTS  IN  FIGURES. 

30-  Sometimes  the  multiplier  can  be  separated.     For  instance, 
instead  of  multiplying  by  372,  multiply  by  360-1-12,  that  is  by  12,  first, 
and  then  that  product  by  30. 

31-  To  add  373+391  +  265  in  one  column,  begin  by  saying  (men- 
tally) 374  and  300=674,  and  91=765,  and  200=965,  and  65=1,030. 

32.  In  the  French  method  the  divisor  is  placed  on  the  right  of 
the  dividend,  and  the  quotient  below  the  divisor.  In  the  Italian 
method  of  division,  each  product  is  subtracted  mentally  from  its  par- 
tial dividend,  and  only  the  difference  written  down. 

33«  Eleven  is  an  exact  divisor  of 

1O+1,  of  1OO-1,  of  1.OOO+1,  of  1O.OOO-1,  etc 

34«  Seven,  eleven  and  thirteen  and  their  multiples  77,  91  and 
143,  are  exact  divisors  of  1,001  and  its  multiples  2,002,  3,003,  9,009. 
etc. 

35-  Every  prime  number,  when  divided  by  6,  will  leave  a  re- 
mainder of  i  or  5.  Not  every  number  is  prime,  however,  which  leaves 
these  remainders. 

36.  Every  prime  number  greater  than  5,  is  an  exact  divisor  of 
any  number  expressed  by  as  many  figures,  less  i,  and  all  alike,  as  there 
are  units  in  the  given  prime  number.  Thus,  7  is  an  exact  divisor  of 
1 1  i,in  or  any  multiple  of  it. 

37-  Much  time  can  be  saved  in  almost  any  arithmetical  exercise 
involving  division  by  cancellation,  that  is,  by  rejecting  equal  or  com- 
mon factors  from  both  divisor  and  dividend. 

38.  To  add  two  fractions,  such  as  y$  and  ^,  the  shortest  method 
is  by  cross-multiplication.  That  is,  2X4=8,  and  3X3=9;  9+8=17 
the  numerator.  Then  for  denominator,  multiply  the  denominators  3 
and  4,  and  you  have  11  for  answer. 

39^  This  same  rule  applies  to  subtraction  of  fractions,  except 
that  you  subtract  the  products  instead  of  adding  them. 

4°«  The  following  is  a  business  method  of  multiplying  mixed 
numbers:  Multiply  the  integers  together,  then  multiply  each  integer 
by  the  fraction  in  the  other  number  to  its  nearest  unit,  and  add  the 
products. 

41-  To  square  5^,  that  is  to  multiply  it  by  itself,  say  6  times 


SHORT-CUTS   IN   FIGURES.  283 

five  are  30  and  add  ^.     This  rule  applies  to  all  similar  numbers.     To 
square  i6)4  Sa7  *7  times  15,  and  add  }£. 

42.  To  find  the  value  of  grain  when  sold  by  the  bushel :  divide 
the  weight  by  the  number  of  pounds  in  a  bushel,  and  multiply  this  by 
the  price. 

43.  To  find  the  value  of  hay  or  coal  when  sold  by  the  ton  :  mul- 
tiply the  weight  by  the  price  and  take  half  the  product,  cutting  off 
three  decimal  places. 

44.  To  find  the  area  of  a  right-angled  triangle,  multiply  the 
base  by  the  perpendicular  and  take  half  the  product. 

45-  To  find  the  circumference  of  a  circle,  multiply  the  diameter 
by  3.1416. 

46.  To  find  the  area  of  a  circle,  multiply  the  square  of  the 

diameter  by  .7854. 

47^  To  find  the  area  of  the  surface  of  a  globe  multiply  the  square 
of  the  diameter  by  3.1416. 

48.  To  find  the  solidity  of  a  globe,  multiply  the  cube  of  the 
diameter  by  .5236. 

49.  To  find  the  area  of  a  cylinder  multiply  the  area  of  the  base 
by  the  length. 

50.  To  find  the  hypothenuse  of  a  right-angled  triangle,  find  the 
sum  of  the  squares  of  the  sides  and  extract  the  square  root. 

51.  To  find  the  diagonal  of  a  square,  multiply  the  side  by  10, 
diminish  this  by  one  per  cent,  of  itself,  and  divide  the  remainder  by  7. 

5-2.  To  find  the  amount  of  lumber  in  a  log,  making  proper  al- 
lowance for  waste  :  from  the  square  of  the  diameter  in  inches  subtract 
60;  multiply  the  remainder  by  half  of  the  length  in  feet,  and  point 
off  the  right-hand  figure. 

53.  To  reduce  logs  to  square  timber,  multiply  the  square  of  the 
diameter  in  inches  by  the  length  in  feet ;  take  one-third  of  the  product, 
and  point  off  two  figures.  The  result  will  be  cubic  feet. 

54-  To  find  the  amount  of  grain  in  a  bin,  take  four-fifths  of  the 
number  of  cubic  feet. 

55-  To  find  the  number  of  acres  in  a  rectangular  piece  of  land, 
multiply  the  length  in  rods  by  the  breadth  in  rods,  and  divide -by  i6p. 


284  SHORT-CUTS  IN   FIGURES. 


S<>»  To  find  the  capacity  of  a  vat  or  cistern,  multiply  the  square 
of  the  diameter  in  feet  by  the  depth  in  feet,  and  this  product  by  5^. 
The  result  will  be  in  gallons. 

57*  To  find  the  capacity  of  a  square  tank,  multiply  the  number 
of  cubic  feet  by  7^,  and  you  will  get  the  result  in  gallons. 

58.  To  square  any  number  of  two  figures,  square  the  units;  take 
twice  the  product  of  the  tens  by  the  units,  then  square  the  tens. 

59»  To  square  any  number  of  nines.  Begin  on  the  left  hand 
and  write  as  many  nines  less  one,  as  there  are  nines  in  the  given  num- 
ber, then  write  an  8,  then  as  many  ciphers  as  there  are  nines,  then 
write  one.  Thus  the  square  of  999  is  998,001. 

60.  Any  number  is  divisible  by  three  if  the  sum  of  its  digits  is 
divisible  by  three. 

61.  Any  number  is  divisible  by  four  if  it  ends  with  two  or  more 
ciphers,  or  if  the  number  expressed  by  its  two  right-hand  figures  is  di- 
visible by  four. 

62.  Any  number  is  divisible  by  five  if  its  right-hand  figure  be  five 
or  a  cipher. 

63.  Any  number  is  exactly  divisible  by  7,  n  and  13,  if  the  units' 
period  and  the  thousands'  period  are  the  same. 

64.  The  product  of  all  the  prime  factors  of  a  number  equals 
that  number. 

65.  The  product  of  the  greatest  common  divisor  and  least  com- 
mon multiple  of  two  numbers  equals  the  product  of  the  two  numbers. 

66.  To  multiply  any  two  small  numbers,  each  of  which  end  in 
one-half,  to  the  product  of  the  whole  numbers,  add  half  their  sum, 
plus  i^. 

67.  When  (in  Rule  66)  the  sum  is  an  odd  number,  take  half  the 
next  number  below  it,  and  the  fraction  in  the  answer  will  be  ^. 

68.  To  multiply  any  two  numbers  having  the  same  fraction  :  to 
the  product  of  the  whole  numbers,  add  the  product  of  their  sum  by  the 
fraction  ;  to  this  add  the  product  of  the  fractions. 

69.  A  square  number  multiplied  by  a  square  number  produces  a 
square  number. 

70.  Any  number  is  divisible  by  nine  if  the  sum  of  its  digits  is 

divisible  by  nine. 


SHORT-CUTS   IN   FIGURES. 


7i«  To  multiply  any  two  numbers  such  as  86  by  84,  where  the 

first  numbers  are  the  same  and  the  second  numbers  add  to  10  simply 
say  4  times  6  are  24,  carry  one,  and  9  times  8  are  72,  putting  down 
7,224  as  the  product. 

72.  Here  is  a  very  excellent  rule  for  finding  the  area  of  a  trian- 
gle when  the  three  sides  are  given  :  From  half  the  sum  of  the  three 
sides  subtract  each  side  separately,  multiply  the  half-sum  and  the  three 
remainders  together;  the  product  will  be  the  area. 

73»  To  find  the  volume  of  a  solid  ring,  multiply  the  area  of  cir- 
cular section  of  the  ring  by  the  length  of  the  ring. 

74-  To  find  the  sum  of  any  number  of  numbers  in  arithmetical 
progression,  as  2,  4,  6,  8,  10,  etc.,  i,  2,  3,  4,  5,  etc.,  3,  6,  9,  etc., 
add  the  first  to  the  last  and  multiply  half  the  sum  by  the  number  of 
numbers. 

75.  (a—  b)  (a+b)=a2—  b2. 

76.  To  find  the  diagonal  of  a  cube  multiply  its  side  by  the 
square  root  of  3. 

77»  The  diameter  of  a  circle  multiplied  by  .8862  is  equal  to  the 
side  of  an  equal  square. 

78.  One  half  the  sum  of  two  numbers  plus  one  half  their  difference 
is  equal  to  the  larger  number,  and  one  half  the  sum  minus  one  half  the 
difference  is  equal  to  the  smaller  number. 

79.  The  square  of  the  sum  of  two  numbers  minus  the  sum  of  their 
squares  is  equal  to  twice  their  product. 

80.  The  difference  of  the  squares  of  two  numbers  divided  by  the 
sum  of  the  numbers  is  equal  to  the  difference  between  the  numbers. 

81.  To  find  the  volume  of  a  pyramid  or  cone  multiply  the  area 
of  the  base  by  one  third  of  the  altitude. 

82.  To  find  the  volume  of  a  cylindrical  ring  multiply  the  ful 
diameter  of  the  circle  formed  by  the  square  of  the  thickness,  and  that 
product  by  2.4674. 

83.  To  estimate  the  weight  of  coal  in  any  given  space,  multiply 
the  contents  in  cubic  feet  by  54  for  anthracite,  or  by  50  for  bituminous 
coal,  and  the  product  will  be  the  weight  in  pounds. 


284  SHORT-CUTS   IN   FIGURES. 

56.  To  find  the  capacity  of  a  vat  or  cistern,  multiply  the  square 
of  the  diameter  in  feet  by  the  depth  in  feet,  and  this  product  by  5^. 
The  result  will  be  in  gallons. 

57.  To  find  the  capacity  of  a  square  tank,  multiply  the  number 
of  cubic  feet  by  7^,  and  you  will  get  the  result  in  gallons. 

58.  To  square  any  number  of  two  figures,  square  the  units;  take 
twice  the  product  of  the  tens  by  the  units,  then  square  the  tens. 

59«  To  square  any  number  of  nines.  Begin  on  the  left  hand 
and  write  as  many  nines  less  one,  as  there  are  nines  in  the  given  num- 
ber, then  write  an  8,  then  as  many  ciphers  as  there  are  nines,  then 
write  one.  Thus  the  square  of  999  is  998,001. 

60.  Any  number  is  divisible  by  three  if  the  sum  of  its  digits  is 
divisible  by  three. 

61.  Any  number  is  divisible  by  four  if  it  ends  with  two  or  more 
ciphers,  or  if  the  number  expressed  by  its  two  right-hand  figures  is  di- 
visible by  four. 

62.  Any  number  is  divisible  by  five  if  its  right-hand  figure  be  five 
or  a  cipher. 

63.  Any  number  is  exactly  divisible  by  7,  n  and  13,  if  the  units' 
period  and  the  thousands'  period  are  the  same. 

64.  The  product  of  all  the  prime  factors  of  a  number  equals 
that  number. 

65.  The  product  of  the  greatest  common  divisor  and  least  com- 
mon multiple  of  two  numbers  equals  the  product  of  the  two  numbers. 

66.  To  multiply  any  two  small  numbers,  each  of  which  end  in 
one-half,  to  the  product  of  the  whole  numbers,  add  half  their  sum, 
plus  #. 

67.  When  (in  Rule  66)  the  sum  is  an  odd  number,  take  half  the 
next  number  below  it,  and  the  fraction  in  the  answer  will  be  ^. 

68.  To  multiply  any  two  numbers  having  the  same  fraction :  to 
the  product  of  the  whole  numbers,  add  the  product  of  their  sum  by  the 
fraction  ;  to  this  add  the  product  of  the  fractions. 

6p«  A  square  number  multiplied  by  a  square  number  produces  a 
square  number. 

70.  Any  number  is  divisible  by  nine  if  the  sum  of  its  digits  is 
divisible  by  nine. 


SHORT-CUTS   IN   FIGURES. 


?'•  To  multiply  any  two  numbers  such  as  86  by  84,  where  the 

first  numbers  are  the  same  and  the  second  numbers  add  to  10  simply 
say  4  times  6  are  24,  carry  one,  and  9  times  8  are  72,  putting  down 
7,224  as  the  product. 

72.  Here  is  a  very  excellent  rule  for  finding  the  area  of  a  trian- 
gle when  the  three  sides  are  given  :  From  half  the  sum  of  the  three 
sides  subtract  each  side  separately,  multiply  the  half-sum  and  the  three 
remainders  together;  the  product  will  be  the  area. 

73-  To  find  the  volume  of  a  solid  ring,  multiply  the  area  of  cir- 
cular section  of  the  ring  by  the  length  of  the  ring. 

74  •  To  find  the  sum  of  any  number  of  numbers  in  arithmetical 
progression,  as  2,  4,  6,  8,  10,  etc.,  i,  2,  3,  4,  5,  etc.,  3,  6,  9,  etc., 
add  the  first  to  the  last  and  multiply  half  the  sum  by  the  number  of 
numbers. 

75.  (a—  b)  (a+b)=a2—  b2. 

76.  To   find   the   diagonal  of  a  cube  multiply  its  side  by  the 
square  root  of  3. 

77.  The  diameter  of  a  circle  multiplied  by  .8862  is  equal  to  the 
side  of  an  equal  square. 

78.  One  half  the  sum  of  two  numbers  plus  one  half  their  difference 
is  equal  to  the  larger  number,  and  one  half  the  sum  minus  one  half  the 
difference  is  equal  to  the  smaller  number. 

79-  The  square  of  the  sum  of  two  numbers  minus  the  sum  of  their 
squares  is  equal  to  twice  their  product. 

80.  The  difference  of  the  squares  of  two  numbers  divided  by  the 
sum  of  the  numbers  is  equal  to  the  difference  between  the  numbers. 

81.  To  find  the  volume  of  a  pyramid  or  cone  multiply  the  area 
of  the  base  by  one  third  of  the  altitude. 

82.  To  find  the  volume  of  a  cylindrical  ring  multiply  the  ful 
diameter  of  the  circle  formed  by  the  square  of  the  thickness,  and  that 
product  by  2.4674. 

83.  To  estimate  the  weight  of  coal  in  any  given  space,  multiply 
the  contents  in  cubic  feet  by  54  for  anthracite,  or  by  50  for  bituminous 
coal,  and  the  product  will  be  the  weight  in  pounds. 


286  SHORTHAND  MULTIPLICATION. 

SHORTHAND  MULTIPLICATION. 

Under  this  heading  we  give  a  full  and  complete  explanation  of 
some  peculiarities  of  figures  which  have  been  taken  advantage  of  in 
framing  rules  for  shortening  the  process  of  multiplication. 

Multiply   34   by   36. 

Note  these  numbers.     The  left-hand  figures  are  the  same 
and  the  right-hand  figures  add  to  ten.     To  find  the  product, 
say  6  times  4  are  24,  putting  down  both  figures;  carry  one, 
and  say  4  times  3  are  12,  putting  down  both  figures.  '  Always 
Note  the  numbers  to  which  this  rule  applies. 


13      14      15 
17      16      15 


In  the  teens. 


21  22  23  24  25 

29  28  27  26  25  In  the  twenties, 

31  32  33  34  35 

39  38  37  36  35  In  the  thirties. 

41  42  43  44  45 

49  48  47  46  45  In  the  forties. 

51  52  53  54  55 

59  58  57  56  55  In  the  fifties. 

61  62  63  64  65 

69  68  67  66  65  In  the  sixties. 

71  72  73  74  75 

79  78  77  76  75  In  the  seventies 


§1  OO  QO  GiA  OR 

Oas  OO  O4  OO 

9         88  87  86  85  In  the  eighties. 

91       92  93  94  95 

99         98  97  96  Jg§.          In  the  nineties. 


SHORTHAND    MULTIPLICATION.  287 


This  rule  applies  also  to  numbers  of  more  than  two  figures  each. 
Note  the  following  examples  : 


295 
295 

392   393   491   792   996 
398   397   499   798   994 

The  difficulty,  if  any,  will  arise  in  multiplying  the  two  left-hand 
figures  of  each,  for  instance,  in  132  by  138,  we  say  8  times  2  are  six- 
teen, then  carry  one,  and  14  times  13  are  172,  giving  the  answer  17,- 
216.  When  we  carry  one  to  39,  for  instance,  we  make  it  40,  and  the 
product  of  40  and  39  is  easily  obtained  by  mental  process. 

Multiply    66    by    82. 

Here  the  two  figures  of  one  product  are  the  same  and  the 
two  figures  of  the  other  product  add  to  ten.     The  rule  is 
the  same.     Twice  6  are  12,  put  down  both  figures ;  carry 
one,  and  9  times  6  are  54,  giving  the  product  5,412.     Note 
a  few  of  the  numbers  to  which  this  rule  applies : 


22  22  22 
73  64  55  28  82  37 

22  22  22  33  33  33 
91   1_9  46  73  37  82 

44  55  66  77  88  99 
91   82  73  64  46  28 

Multiply   31   by    68. 

The  complement  of  a  number  is  the  number  which  added  to  it 
makes  an  even  ten,  or  an  even  100,  or  an  even  1,000.  Thus  the  com- 
plement of  8  is  2,  of  93  is  7,  etc. 

The  complement  of  8  is  2.  Now  suppose  for  the  8  in  this  exam- 
ple we  put  2  and  then  by  cross-multiplication  we  have  3X2=6X1. 


288 


SHORTHAND    MULTIPLICATION. 


Q  -J  Whenever  (by  the  use  of  one  complement)  the  products  by 
cross-multiplication  are  equal  the  same  rule  applies.  In  this 
example  say  8  times  i  are  08,  carry  one  and  say  7  times  3 
21  Oo  are  21,  which  gives  as  product  2,108.  This  adds  a  very 
large  number  of  numbers  to  our  list.  Note  the  following,  and  apply 
the  rule  to  each  : 


13   13 
24  31 


14 


28   17  24 
16  26   18 


48  22  21   21   22  23 

18  19  48  67  46  44 

23  24  39  24  26  36 

61  34  24  42  31  26 

48  46  69  42  63  84 
26  27  27  29  29  29 

31  31   32  32  48  34 

68  97  66  94  34  62 

36  68  64  96  93  41 

42  36  38  38  39  88 

42  43  46  86  63  84 

86  84  61   47  48  48 

82  93  96   12  88  62 

49  68  66  26  55  97 

This  application  of  this  rule  holds  good  also  with  numbers  of  three 
figures  each,  or  numbers  where  one  factor  contains  three  figures  and  the 

other  two.     It  holds  good  also  in  fractional  numbers.  Note  the  follow- 
ing examples : 

128  146  126  328  246 

94  77   86   88  49 

1O5  147  246 

143  124  127 

43  53   62 

121  151  242 


84   92 
443  186 


SHORTHAND   MULTIPLICATION.  289 

This  same  simple  rule  applies  also  to  fractional  numbers,  more  es- 
pecially to  numbers  where  only  one  of  the  factors  is  fractional.  Note 
the  following  examples,  and  in  finding  the  product,  say  6^  times  7  are 
45j/2  and  put  down  the  whole  product;  then  carry  one,  and  say  5  times 
8  are  40,  giving  the  answer  4045^. 

87       93       42       65       49 
46^      481      3J&      371      172 

74       34       63       37       98 
38?      701      3&z      171      37J, 


The  author  does  not  claim  that  this  application  is  practical,  for  the 
reason  that  the  application  of  the  rule  cannot  be  seen  at  a  glance.  It 
shows,  however,  to  what  extent  this  very  simple  discovery  can  be  car- 
ried. The  rule  applies  also  in  quite  Urge  numbers.  Note  the  follow- 
ing : 

276       843       1127       2568 
362     1126       1282       2243 

Multiply   76   by   36. 

36        ^is  is  a  modification  of  the  same  rule.     Note  that  the 
76    left-hand  figures  add  to  ten  and  the  right-hand  figures  are 
2736    ^ie  same>     The  process  is  as  follows: 

6X6=36 
7X3+6=27 

Instead  of  carrying  one,  you  carry  one  of  the  unit  numbers  (in 
this  instance  six),  and  add  it,  not  to  either  of  the  tens,  but  to  their 
product.  Note  the  following  examples  : 

26  25  24  23  22  21 
86  85  84  83  82  81 

29  31 
_  _  89  71   _ 

34  35  36  37  3 
74  75  76  77  7 


SHORTHAND    MULTIPLICATION. 


41   42  43  44  45  46 
61   62  63  64  65  66 

47  48  49  51   52  53 
67  68  69  51   52  53 

54  55  56  57  58  59 
54  55  56  57  58  59 

The  same  rule  applies  to  larger  numbers.  In  the  following  ex- 
amples add  double  the  unit  figure.  Always  add  double  when  the  sum 
of  the  tens  20 ;  when  30,  add  three  times  the  unit  number,  and  so  on. 

126    6X  6=36 

86    8X12+ (double  6)=1O8 

1O836 

133     134     135     136     137 
73       74       75       7Q       77 

142     143     144     145     146 
62       63       64       65       68 

151      153     154     157     159 
51        53       54       57       59 

162     163     165     167 
48       43       45       47 

183     184     185     186     18 

.25      .26. 


Multiply  32  T>y  52. 

Here  the  left-hand  figures  add  to  8,  and  the  right-hand  figures  are 
the  same.     Instead  of  saying  twice  two,  take  the  complements  8  and  8 

and  multiply  them  for  the  first 

32      8X8=64  two    figures   of    the   product. 

52      5X3  +  2 — 1—16      Find  the  remaining  figures  as 

1664  in  the  last  rule' only  subtract 

one  in  every  case   from  your 


SHORTHAND   MULTIPLICATION.  29! 

result.  Five  times  3  plus  2  less  i  equals  16.  Apply  this  modification 
to  the  following  examples  : 

23  24  25  26  27  28 
63  64  65  66  67  68 

32  33  34  35  36  49 
52  53  54  55  56  59 

41   32  43  44  45  47 
41   42  43  44  45  47 

13   14   15   16   17   18 
73  74  75  76  77  78 

The  same  rule  applies  to  larger  numbers.  When  the  sum  of  the 
ten?  is  18,  add  double  one  of  the  unit  numbers;  when  28,  add  three 
times  the  unit  number,  and  so  on.  Note  the  following  examples : 

124  125  123  128  127 
64   65   63  _68   67 

231  232  233  234  239 
51   52   53  _54  _59 

542  643  744  849  947 
_42   _43   44   49   47 

When  the  sum  of  the  left-hand  figures  is  5  and  the  right-hand 
figures  are  alike,  add  one-half  of  the  like  number  to  the  product  of  the 
left-hand  numbers,  as : 

If  the   right-hand  numbers 

36      6X6  =  36  are  odd,  it  will  be  impossible 

26      3X2+ (2  of  6):=:9     to   take   an    even    half.     The 

Q36  difficulty  can  be  overcome  by 

making  the  half  a  decimal  wc\& 

adding  it  in.  In  this  example,  if  it  were  37  by  27,  the  product  would 
be  999.  Here  we  have  7  times  7  are  49,  and  50  (the  decimal  of  3}^ 
or  3.50)  makes  99.  If  the  sum  of  the  left-hand  figures  is  15,  add  one 
and  one-half  times  the  equal  number;  if  the  sum  is  25,  add  two  and 


29 2  SHORTHAND   MULTIPLICATION. 


one-half  times 
apply  this  rule 

the  equal 
to  each  : 

number. 

Note  the 

following 

examples, 

and 

32 
22 

34 
24 

38 
28 

31 
21 

33 
23 

35 
25 

37 
27 

45 
15 

47 
17 

46 
16 

48 

49 
19 

86  84  85  83  82  88 
76  74  75  73  72  78 

63  64  65  66  67  62 
93  94  95  96  97  92 

The  same  rule  applies  to  numbers  of  more  than  two  figures  each. 
Note  the  following: 

135     127     172     169     238 
25      37     182     199     328 

When  the  sum  of  the  left-hand  figures  is  3,  or  13,  or  23,  proceed 
as  when  5,  or  15,  or  25,  only  deduct  one  from  your  left-hand  total. 
That  is,  when  you  find  the  product  of  the  left-hand  numbers,  deduct 
one,  then  add  as  before. 

There  are  many  other  modifications,  rules  and  exceptions.  These, 
however,  are  the  most  practical  and  will  be  found  of  great  benefit  to 
all  who  give  them  study. 


MECHANICS 


ARITHM1 


NOTES  AND  DEFINITIONS. 

A  straight  line  is  a  line  which  does  not  change  in  its  direction. 

Parallel  lines  are  lines  which  always  remain  the  same  distance 
from  each  other,  however  far  they  may  be  produced. 

The  opening  between  tw.o  straight  lines  drawn  from  the  same  point 
is  called  an  angle. 

When  two  straight  lines  cross  each  other  so  as  to  form  four  equal 
angles,  the  angles  are  called  right  angles. 

An  angle  greater  than  a  right  angle  is  called  an  obtuse  angle,  and 
an  angle  less  than  a  right  angle  is  called  an  acute  angle. 

A  surface  has  length  and  breath  without  thickness.  A  plane  sur- 
face is  a  level  surface.  The  amount  of  space  over  which  a  surface  ex- 
tends is  called  its  area. 

A  surface  bounded  by  four  straight  lines,  and  having  four  right 
angles,  is  called  a  rectangle. 

A  rectangle  is  called  a  square  when  its  four  sides  are  equal. 

The  line  joining  two  opposite  corners  of  a  square  or  rectangle  is 
called  the  diagonal. 

A  plane  figure  bounded  by  three  straight  lines  is  a  triangle.  The 
base  of  a  triangle  is  the  side  on  which  it  is  supposed  to  rest. 

The  altitude  of  a  triangle  is  the  perpendicular  distance  from  the 
angle  opposite  the  base  to  the  base,  or  to  the  base  produced. 

A  four-sided  plane  figure  having  no  two  sides  parallel  is  called  a 
trapezium. 

The  perimeter  of  a  plane  figure  is  the  sum  of  its  sides. 

A  circle  is  a  plane  figure  bounded  by  a  curved  line,  every  point 
of  which  is  equally  distant  from  a  point  within,  called  the  center. 
The  boundary  line  is  called  the  circumference.  A  straight  line 

(293) 


MECHANICS'  ARITHMETIC. 


drawn  through  the  center  and  terminating  at  the  circumference  on  both 
sides  is  called  a  diameter.  A  straight  line  drawn  from  the  center  to 
the  circumference  is  called  a  radius. 

A  solid  has  length,  breadth,  and  thickness,  or  height.  A  cube  is 
a  solid  figure  contained  by  six  equal  squares.  A  rectangular  solid  is 
a  solid  figure  contained  by  six  angular  surfaces. 

The  volume  of  a  rectangular  solid  is  the  portion  of  space  which 
it  occupies. 

A  solid  bounded  by  a  curved  surface,  every  point  of  which  is 
eq::?,%  distant  from  a  point  within,  called  the  center,  is  called  a  globe, 
or  sphere. 

A  cylinder  is  a  solid  figure  described  by  the  revolution  of  a  rec- 
tangle about  one  of  its  sides,  which  remains  fixed.  An  uncut  lead- 
pencil  is  an  example. 

Measurement   Tables. 

Linear  measure  is  used  in  measuring  lengths  and  distances. 
The  table  is  as  follows  : 

12  inches    .     .     .     .     =     i  foot    ...//. 
3  feet    .....     =     i  yard   .     .     .    yd. 
5^  yards  (16^  feet)       =     i  rod      .     .     .     rd. 
320  rods  .....     =     i  mile    .     .     .     mi. 
Remember  that  i  mile  equals  1,760  yards. 

Surveyor's  linear  measure  is  used  by  surveyors  in  measuring  land 
and  distances.  The  table  is  as  follows  : 

7.92  inches         .     .     .     =     i  link  '  .     .  .  /. 

25  links      .     .     .     .    r=     i  rod      .     .  .  rd. 

100  links  (4  rods)       .     =     i  chain   .     .  .  ch. 

80  chains    .     .     .     .     =     i  mile     .     .  .  mi. 
Remember  that  a  chain  equals  66  feet  or  4  rods. 

Surface  measure  is  used  in  measuring  surfaces.  The  table  is  as 
follows  : 


144  square  inches 

9  square  feet 
30^  square  yards 
1 60  square  rods 
640  acres 


square  foot  .  sq.  ft. 

square  yard  .  sq.  yd. 

square  rod  .  sq.  rd. 

acre      .     .  .  A. 

square  mile  .  sq.  mi. 


A  square  measuring  208.71  -f  feet  on  each  side  contains  i  acre. 


MECHANICS'  ARITHMETIC.  295 

Surveyor's  square  measure  is  used  by  surveyors  in  computing  the 
area  of  land.  The  table  is  as  follows : 

625  square  links     .     .     =     i  square  rod      .     sq.  rd. 
1 6  square  rods      ...     =     i  square  chain  .     sq.  ch. 
10  square  chains        .     =     i  acre       .     .     .     A 
An  acre  equal  4,840  square  yards. 

Cubic  Measure  is  used  to  measure  the  contents  or  volume  of 
solids.  The  table  is  as  follows: 

1728  cubic  inches         .     =     i  cubic  foot  .     .     cu.ft. 
27  cubic  feet        .     .     =     i  cubic  yard       .     cu.  yd. 
128  cubic  feet        .     .     =     i  cord       .     .     .     cd. 

Rectangular    Planes. 

The  area  of  any  rectangle  is  expressed  by  the  product  of  the 
length  and  the  breadth.  Before  multiplying  it  is  necessary  that  both 
dimensions  be  expressed  in  units  of  the  same  denomination. 

In  the  same  manner,  if  a  rectangle  be  3  feet  long  and  3  feet 
broad,  its  area  is  12  square  feet ;  that  is,  the  rectangle  might  be  divided 
into  12  equal  figures,  each  being  a  foot  long  and  a  foot  broad. 

Rectangular    Solids. 

The  volume  of  a  rectangular  solid  is  expressed  by  the  product  of 
the  length,  breadth,  and  height,  when  the  three  dimensions  are  ex- 
pressed in  units  of  the  same  denomination. 

To  measure  a  solid  block,  or  to  find  how  much  a  box,  a  bin,  or 
*  cellar  will  contain,  we  have  to  ascertain,  by  actual  measurement,  its 
length,  breath,  and  depth,  and  with  these  three  dimensions  find  the 
volume  by  simple  multiplication.  Thus,  if  we  desire  to  find  the  num- 
ber of  cubic  yards  of  earth  removed  in  digging  a  cellar  40  feet  long, 
j8  feet  wide,  and  10  feet  deep,  we  multiply  40,  18,  and  10  together, 
jind  get  7,200  feet,  or  266^3  cubic  yards. 

"Wood. 

Wood  cut  in  lengths  of  4  feet  is  called  cord  wood.  A  pile  of 
cord  wood  4  feet  high  and  8  feet  long,  or  equal  bulk  of  other  material, 
is  called  a  cord. 

Thus,  a  cord  of  wood  is  8  feet  by  4  feet  by  4  feet,  and  contains 
128  cubic  feet.  To  find  the  number  of  cords  in  a  pile  of  wood  or  bark 
piled  in  the  form  of  a  rectangular  solid,  find  its  solid  contents  or  volume 
in  cubic  feet,  and  divide  the  result  by  128. 


296  MECHANICS'  ARITHMETIC. 


Lumber. 

Lumber,  as  the  term  is  used  here,  includes  all  kinds  of  sawed 
boards,  planks,  scantlings,  etc. 

A  foot  of  lumber  is  i  foot  long,  i  foot  wide,  and  i  inch  thick, 
and  is  used  as  the  unit  of  lumber  measurement. 

The  term  scantling  is  given  to  lumber  3  or  4  inches  wide,  and 
from  2  to  4  inches  thick.  Joist  is  usually  narrow  and  deep.  Lumber 
heavier  than  joist  or  scantling  is  called  timber.  Thick  boards  are 
called  planks.  The  usual  outside  covering  of  wood  houses  is  siding. 

All  lumber  less  than  i  inch  in  thickness  is  considered  inch  lumber 
in  measuring. 

In  measuring  the  width  of  a  board  a  fraction  greater  than  a  half- 
inch  is  called  an  inch,  and  if  less  than  a  half  it  is  rejected.  A  board 
5^3  inches  wide  would  be  considered  6  inches  wide. 

The  price  of  lumber  is  usually  quoted  at  a  certain  rate  per  thou- 
sand feet. 

A  board  14  feet  long,  12  inches  wide  and  i  inch  in  thickness 
would  contain  (14X12X1)  -*-  12,  or  14  feet.  A  board  10  feet  long,  16 
inches  wide,  and  3  inches  thick,  would  contain  (10X16X3)  -*-  12,  or 
40  feet.  Note  that  in  measuring  1 2-foot  lumber,  i  inch  or  less  in  thick- 
ness, the  width  of  the  board  in  inches  is  the  number  of  feet  it  contains. 

Stone-work. 

A  cord  of  stone  is  the  same  size  as  a  cord  of  wood.  In  esti- 
mating stone-work  no  smaller  part  than  quarter  cords  is  allowed. 

A  cord  of  stone  will  make  about  100  cubic  feet  of  wall. 

In  estimating  the  amount  of  stone  or  the  cost  of  the  mason- 
work,  it  is  customary  to  measure  around  the  outside  of  the  wall,  and 
make  no  allowance  for  openings  except  they  are  large. 

Three  bushels  of  lime  and  a  cubic  yard  of  sand  will  lay  a  cord  of 
stone. 

A  perch  of  stone- work  is  i  rod  long,  i  ^  feet  thick,  and  i  foot 
high :  it  contains  24^  cubic  feet.  A  fractional  part  of  a  perch  is 
reckoned  as  a  perch. 

Brick-work. 

Bricks  vary  so  much  in  size  and  style  that  a  table  of  exact 
dimensions  is  impracticable.  Ordinary  bricks  are  8^  inches  long,  4 
inches  wide,  and  2^  inches  high. 

It  is  sufficiently  accurate  to  reckon  20  bricks  to  the  cubic  foot  laid 
dry. 


MECHANICS*   ARITHMETIC. 


In  half-brick  walls,  such  as  are  built  in  veneering  wooden  houses, 
each  brick,  with  the  mortar  required  to  lay  it,  has  an  external  surface  of 
3  inches  by  9  inches,  or  a  brick  is  required  for  each  27  inches  of  sur- 
face. 

In  estimating  material,  corners  are  measured  once,  and  allow- 
ance is  made  for  doors  and  windows.  In  estimating  labor,  the  cor- 
ners are  measured  twice ;  that  is,  the  outside  measurement  is  taken 
and  usually  one-half  is  deducted  for  openings. 

Shingling. 

Ordinary  shingles  have  an  average  width  of  4  inches,  and  are 
generally  laid  4  inches  to  the  weather. 

A  bunch  of  shingles  contains  a  quarter  of  a  thousand.  It  is  20 
inches  wide,  and  has  25  courses  on  each  side. 

Allowing  for  waste,  1,000,  or  a  square  of  shingles,  will  lay 
100  square  feet,  4  inches  to  the  weather. 

Jjathing. 

A  bunch  of  laths  contains  50  laths.  Laths  are  4  feet  long,  \y2 
inches  wide,  and  are  laid  three-eights  of  an  inch  apart. 

Allowing  for  waste,  contractors  reckon  that  a  bunch  of  laths  will 
cover  3  square  yards. 

Lathing  is  estimated  by  the  square  yard.  Only  one-haif  the  sur- 
face of  openings  is  deducted. 

Plastering. 

Plastering  is  estimated  by  the  square  yard.  Only  half  the  sur- 
face of  the  openings  is  charged. 

Painting. 

Painting  and  kalsomining  are  estimated  by  the  square  yard. 

Wall-paper. 

Wall -paper  is  sold  only  by  the  roll,  any  part  of  a  roll  being 
counted  as  a  whole  one. 

American  paper  is  18  inches  wide,  and  has  24  feet  in  a  single  roll, 
and  48  feet  in  a  double  roll. 

Paper-hangers  measure  the  distance  around  the  room  in  feet  and 
deduct  3  feet  for  each  door  and  window.  The  difference,  divided  by 
i^,  gives  the  number  of  strips. 

The  exact  cost  of  papering  a  room  can  be  ascertained  only  by 
taking  account  of  the  number  of  rolls  actually  used  in  doing  the  work. 


2Q8  •"      MECHANIC*'   ARITHMETIC 


Miscellaneous   Rules. 

1.  To  find  the  circumference  of  a  circle  multiply  the  diameter  by 
3-MI59- 

2.  To  find  the  diameter  of  a  circle,  divid*  the  circumference  by 
3  HI$* 

3.  When  the  three  sides  of  a  triangle  are  given,  to  find  the  area  : 
From  half  the  sum  of  the  three  sides  subtract  each  side  separately. 
Multiply  the  half-sum  and  the  three  remainders  together,  and  extract 
the  square  root  of  the  product. 

4.  To  find  the  area  of  a  circle,  multiply  the  circumference  by 
one-half  the  radius. 

5.  To  find  the  surface  of  a  sphere,  multiply  the  circumference  by 
the  diameter. 

6.  To  find  the  contents  of  a  sphere,  multiply  the  surface  of  the 
sphere  by  one-third-of  the  radius. 

7.  To  find  the  hypothenuse  of  a  right-angled  triangle,  add  the 
square  of  the  base  to  the  square  of  the  perpendicular,  and  take  the 
square  root  of  the  sum. 

Drill    Exercises    for   Home    Students. 

1.  How  many  inches  are  there  in  2^  rods? 

2.  How  many  inches  are  there  in  a  chain  ? 

3.  How  many  links  are  there  in  1,760  yards? 

4«  What  is  the  cost  of  a  cable  1,230  feet  long  at  95  cents  per 
yard? 

5«  The  hold  of  a  vessel  is  30  feet  deep,  and  her  topmast  is  90  feet 
high.  If  she  sinks  in  16  fathoms  of  water,  how  much  of  her  rigging  will 
be  visible  ? 

6.  What  is  the  cost  of  35  miles  of  telephone  wire  at  40  cents  a 
pound,  supposing  a  pound  to  stretch  20  feet? 

?•  Find  the  cost  of  80  rods  of  barbed  wire  fencing  of  five  wires,  at 
2  cents  per  yard. 

8.  What  will  it  cost  to  survey  36  miles  of  railway  at  $i.i2}4  Per 
chain  ? 

9.  Find  the  cost  of  carpeting  a  stairway  of  24  steps,  each  12  inches 


MECHANICS*  ARITHMETIC.  299 


wide,  and  having  a  rise  of  8  inches,  allowing  2  feet  extra  for  the  pro- 
jection of  the  steps,  the  carpet  costing  $1.25  per  yard. 

10.  How  many  telegraph  poles  placed  60  yards  apart  will  be  re- 
quired in  75  miles? 

11.  How  many  square  feet  are  there  in  a  square  chain? 

12.  Find  the  cost  of  20  square  rods  of  sodding  at  3  cents  per  square 
foot. 

13.  What  will  3,200  square  rods  of  land  cost  at  $1.25  per  square 
chain  ? 

14*  Find  the  cost  of  waxing  a  floor  24  feet  long  by  12  feet  9  inches 
wide,  at  75  cent  per  square  yard  ? 

15.  How  many  yards  of  cotton  i*£  yards  wide  will  it  take  to  line 
15  yards  of  cloth  ^  of  a  yard  wide  ? 

16.  How  many  bricks,   each  9  inches  by  4)^  inches,  will  be  re- 
quired to  pave  the  floor  of  a  basement  36  feet  by  27^  feet  ? 

17.  How  many  cubic  inches  are  there  in  a  cube  whose  edge  is  4 
feet? 

18.  If  a  block  of  stone  5  inches  long,  3  inches  wide,  and  2  inches 
high  weighs  44  ounces,  what  will  be  the  weight  in  pounds  of  a  cubical 
block  of  the  same  kind  of  stone  whose  edge  is  2^  feet? 

19.  What  weight  of  water  will  a  rectangular  tank  contain,   the 
length  being  8  feet,  breadth  5^  feet,  and  depth  7  feet  ?     A  cubic  foot 
of  water  weighs  62^  pounds. 

20.  How  many  cords  of  wood  are  there  in  a  pile  16  feet  long,  12 
feet  wide,  and  6  feet  high  ? 

21.  What  is  the  value  of  a  pile  of  wood  120  feet  long,  16  feet  wide, 
and  8  feet  high,  at  $4.50  per  cord  ? 

22.  What  is  the  value  of  a  pile  of  tan-bark  120  feet  long,  36  feet 
wide,  and  12  feet  high,  at  $6.10  per  cord? 

23.  A  sleigh  upon  which  four-foot  wood  is  piled  is  12  feet  long. 
How  high  should  the  wood  be  piled  to  make  i^  cords? 

24.  What  is  the  value  of  a  township  of  land  at  the  rate  of  $80  for 
each  half-section  ? 

25.  How  many  acres  are  there  in  the  right-angled  triangle  formed 


300  MECHANICS'  ARI'.UMETIC. 


by  joining  the  opposite  angles  of  a  rectangular  field  40  rods  long  and 
25  rods  wide  ? 

26.  From  a  lot  40  rods  square  I  sold  40  square  rods.     What  is  the 
value  of  the  remainder  at  $120  per  acre? 

27.  How  many  feet  of  lumber  are  there  in  a  board  12  feet  long,  6 
inches  wide,  and  i  inch  thick  ? 

28.  Find  the  number  of  feet  of  lumber  in  a  plank  16  feet  long,  14 
inches  wide,  and  2  inches  thick. 

29.  How  much  inch  lumber  will  laj      floor  16  feet  by  20  feet? 

3<>«  How  many  feet  of  lumber  in  &>  .stick  of  timber  1 6  feet  long, 
and  9  inches  square  ? 

31.  How  many  feet  of  lumber  in  40  pieces  of  siding,   each    12 
feet  long,  6  inches  wide,  and  half  an   inch  thick?     All  lumber  less 
than  i  inch  in  thickness  is  considered  inch  lumber  in  measuring. 

32.  How  much  lumber  is  there  in  40  two-by-four  scantlings,  each 
12  feet  long  ? 

33-  Find  the  cost  of  1,274  feet  of  lumber  at  $18  per  thousand. 

34 •  Find  the  cost  of  20  planks,  each  16  feet  long,  10  inches  wide, 
and  2^  inches  thick,  at  $15  per  thousand. 

35.  Find   the  cost  of  the  inch  lumber  in  a  tight  board  fence  40 
rods  long  and  6  feet  high,  at  $10  per  thousand  feet. 

36.  Find  the  cost  of  an  inch-board  sidewalk,  4  feet  wide,  around 
the  outside  of  a  garden  200  yards  by  90  feet,  at  $12  per  M. 

37»  A  feeding  floor,  40  feet  long,  is  laid  with  1 6-foot  planks  2^ 
inches  thick.  Find  the  cost  at  $11  per  thousand. 

38.  If  two-by-four  studs  are  used,  and  they  are  placed  16  inches 
apart,  how  many  feet  of  lumber  are  there  in  the  studd;ng  of  a  wall  20 
feet  long  and  1 2  feet  high  ? 

39»  If  4X5  rafters  are  used,  and  they  are  placed  30  inches  apart, 
how  many  feet  of  lumber  are  there  in  the  20-foot  rafters  of  a  double- 
roof  40  feet  long  ? 

40.  A  pile  of  ordinary  bricks  is  8  feet  6  inches  high,  14  feet  long, 
and  15  feet  wide.  What  is  the  pile  worth  at  $12.50  a  thousand? 


OSTSCRIPT 


NEW  YORK  POINTERS  ON  MARGIN  TRADING. 


Select  an  honest  broker.  There  is  no  reason  why  bonds  and  shares 
should  not  be  publicly  dealt  in  and  in  large  quantities,  as  well  as  dry 
goods,  corn,  or  cotton.  But,  unfortunately,  few  stock  dealers  confine 
their  transactions  to  ordinary  legitimate  business.  The  members  of 
stock  exchanges  are  divided  into  two  classes — those  who  execute  com- 
missions for  others,  and  those  who  deal  on  their  own  account.  Among 
the  latter  are  the  boldest  and  sharpest  speculators  of  the  day.  All 
stocks  are  not  quoted.  You  will  look  in  vain  for  the  stocks  of  dozens 
of  corporations  whose  securities  are  among  the  choicest  investments. 
The  reason  is  very  evident.  The  largest  profits  (to  the  speculator)  are 
most  often  made  out  of  the  most  abominable  rubbish.  Profits  are  made 
upon  fluctuations.  To  those  who  are  anxious  to  try  "stocks,"  we  say 
go  carefully.  As  a  rule  it  is  safer  to  earn  money  than  to  make  it. 

Let  us  suppose  for  illustration  that  you  wish  to  speculate  in  wheat. 
You  order  your  broker  to  buy,  say  10,000  bushels.  He  asks  for  a  cash 
deposit  of  5  cents  a  bushel,  or  $500.  You  ask  him  not  to  buy  until  the 
price  reaches  a  certain  limit,  and  if  the  price  does  not  drcp  to  the 
figure  you  quote,  you  either  change  your  limit  or  withdraw  your  order. 
Suppose  he  buys  your  wheat  at  67^.  He  will  charge  you  y&  cent  per 
bushel,  so  that  the  wheat  will  actually  cost  you  67^  cents.  If  the 
market  continues  about  the  same  you  are  not  asked  to  put  up  any  more 
margin.  If  the  price  should  drop  your  broker  will  immediately  call  for 
more  margin.  That  is  to  say,  the  margin  in  any  case  must  be  sufficient 
to  protect  him  against  loss.  If  the  price  advances  you  can  sell  out 
when  you  think  it  has  reached  its  highest  point.  The  broker  will 
charge  you  the  same  commission  for  selling  as  for  buying.  If  you  order* 
your  trade  closed  out  below  the  purchase  price  you  will  lose  the  differ- 
ence between  the  buying  and  selling  price  upon  each  bushel  including 


POSTSCRIPT    NOTtt. 


the  brokerage  and  also  the  interest  at  a  nominal  rate  for  the  time  which 
the  broker  carried  the  trade  for  you.  The  interest  is  charged  upon  the 
amount  of  money  which  the  broker  puts  up.  If  you  fail  to  respond  to 
your  broker's  call  for  margins  and  the  market  declines  to  the  point 
where  your  margins  are  exhausted,  or  nearly  so,  the  broker  will  be  com- 
pelled to  close  your  trade  out  in  order  to  save  himself  from  the  loss 
which  would  occur  on  a  further  decline.  If  your  trade  is  closed  out 
exactly  at  the  exhaust  price  you  lose  all  the  margins  you  have  put  up. 
A  deposit  must  be  kept  with  your  broker  larger  than  the  loss  that  would 
be  shown  by  all  your  trades  if  they  were  closed  at  the  market  price. 
Failure  to  do  this  gives  your  broker,  by  the  rules  of  the  exchanges,  the 
privilege  of  closing  all  your  trades  to  prevent  a  loss.  As  a  rule  people 
wish  to  buy  when  the  market  is  rising  and  are  obliged  to  sell  when  the 
market  is  falling.  In  ordering  your  broker  to  buy,  state  that  your  order 
is  "  open  "  if  you  wish  it  to  be  considered  good  for  more  than  one  day. 
Note  the  following  points  : 

Bank    Clearings. 

The  total  amount  of  checks  on  banks  paid  in  a  given  day  through 
the  clearing  house.  This  total  indicates  the  volume  of  business  done  by 
the  business  community  for  the  day.  When  business  is  active,  clear- 
ings are  large ;  when  dull,  clearings  are  small. 

Bradstreets* 

This  commercial  agency  makes  a  weekly  veport  on  the  world's 
finances  and  the  movements  of  raw  products.  The  speculator  should 
be  thoroughly  familiar  with  such  reports. 

Cable   Reports. 

The  Chicago  Board  of  Trade  receives  daily  advices  as  to  the  condi- 
tion of  foreign  markets  from  London,  Liverpool,  Antwerp,  Berlin,  and 
Paris.  These  are  publicly  posted  for  general  information.  A  great 
many  daily  private  reports  are  received  by  commission  houses  from 
their  foreign  correspondents. 

Call   Prices. 

See  the  chapter  on  Securities.  Calls  good  until  the  close  of  the 
next  regular  session  of  the  exchange  are  usually  sold  a  $i  per  thousand 
bushels  of  grain.  Calls  good  for  a  week  are  often  sold  at  $1.25  per 
thousand,  and  the  call  price  is  furtherjfrom  the  market  price  than  is 


POSTSCRIPT    NOTES.  303 


the  case  with  daily  calls.     Calls  on  stocks  vary  in  price  according  to 
the  conditions. 

Future    Delivery. 

Grain  is  stored  in  warehouses  until  needed  for  milling  or  shipment. 
When  we  speak  of  December  wheat  we  mean  wheat  that  is  to  be  de- 
livered to  the  buyer  in  December.  The  carrying  charges  include  stor- 
age, interest,  and  insurance,  so  that  wheat  sold  for  May  delivery  would 
necessarily  bring  a  higher  price  than  wheat  sold  for  December  delivery. 
Carrying  charges  are  in  favor  of  the  short  seller.  When  sold  for  im- 
mediate delivery  it  is  known  as  cash  grain. 

Commissions. 

Stock  commission  is  usually  ^  per  cent,  or  $1.25  for  10  shares. 
Wheat  commission  is  ^  c.  per  bushel  or  $1.25  per  1,000  bushels.  Pork 
commission  is  2^  c.  per  bbl.,  or  $6.25  for  250  barrels.  Lard  is 
charged  at  the  rate  of  2  c.  per  100  Ifos.,  or  $21.25  f°r  25°  tierces.  A 
tierce  is  a  cask  of  lard  containing  340  pounds.  Cotton  commission  is 
2  points  per  100  rbs.  or  10  cents  per  bale.  Most  of  the  commission 
houses  deal  in  futures  for  their  customers. 

Futures* 

Buyers  of  cash  grain  protect  themselves  against  possible  loss  by 
selling  an  agreed  amount  for  future  delivery  in  some'general  market, 
such  as  Chicago.  Such  contracts  are  called  futures  because  they  do 
not  terminate  until  some  designated  month  in  the  future.  These  trans- 
actions pass  from  hand  to  hand  and  may  be  turned  over  hundreds  and 
thousands  of  times  in  an  active  market  before  maturity,  and  this  is 
called  dealing  in  futures.  Nearly  all  speculative  operations  are  in 
futures. 

Seller's    Option. 

All  future  contracts  are  at  the  sellers'  option  to  deliver  the  grain 
on  any  business  day  of  the  delivery  month.  Therefore  the  buyer  must 
stand  ready  to  take  the  grain  on  any  day  of  the  delivery  month,  or  turn 
his  contract  over  to  someone  else  by  selling  out  the  first  day  of  the 
delivery  month. 

Split    Trading. 

The  name  split  is  given  to  a  transaction,  one-half  at  one  quotation 
and  one-half  at  another.  For  instance,  the  quotation  53^-?^  means 


304  POSTSCRIPT    NOTES. 


that  one-half  of  the  quantity  traded  in  was  at  53^  and  the  other  half 
at  53^.  This  quotation  is  just  half-way  between  the  two  prices.  Only 
an  even  number  of  thousand  bushels  can  be  traded  in  in  this  way,  such 
as  2,000,  4,000,  10,000,  etc. 

Good   Delivery. 

A  Stock  which  exactly  fulfills  the  conditions  of  sale  and  is  de- 
livered to  the  buyer  in  exact  accordance  with  the  rules  of  the  stock 
exchange  is  known  as  "  good  delivery."  If  the  shares  offered  are  of  an 
unacceptable  issue,  or  the  rules  of  the  exchange  are  violated  in  any 
particular  it  is  called  "  bad  delivery  "  and  the  buyer  can  appeal  to  the 
Board. 

Storage    Rates. 

Storage  rates  at  Chicago  are  ^  c.  per  bushel  for  the  first  ten  days, 
and  %  c.  for  each  additional  ten  days  or  part  thereof.  This  is  what 
the  elevator  proprietors  charge,  but  must  not  be  construed  to  mean  that 
this  charge  comes  out  of  the  country  shipper.  The  rules  of  the  Board 
of  Trade  .provide  that  ^  c.  storage  must  go  with  the  first  purchase  of 
grain,  and  this  is  accepted  by  the  buyer,  so  that  the  country  shipper 
has  no  storage  to  pay,  providing  he  has  his  grain  sold  within  the  first 
five  days  after  arrival,  as  the  receipts  must  have  five  days  to  run  free  of 
additional  storage — the  first  charge  being  for  ten  days.  Should  the 
country  shipper  prefer  to  have  his  grain  held  until  the  five  days  have 
elapsed,  then  he  is  charged  y±  c.  storage,  but  has  the  right  to  hold  the 
grain  ten  days  more,  thus  virtually  having  obtained  fifteen  days  storage 
for  his  grain  for  ^  c.  Each  additional  ten  days  will  cost  y$  c.  more, 
and  so  on.  The  point  which  many  country  shippers  have  not  under- 
stood, and  frequently  inquire  about,  is  the  first  ^  c.  storage.  If  the 
grain  is  sold  on  arrival  or  within  the  first  five  days  thereafter,  the  coun- 
try merchant  pays  no  storage.  There  are  three  names  applied  to  these 
storage  receipts.  The  gilt  edge  are  under  four  days  old  and  have  seven 
days  to  run  before  the  first  storage  payment  of  ^  c.  per  bushel  is  ex- 
hausted. The  regular  are  five  days  old.  The  short  receipts  are  those 
the  first  limit  of  which  is  nearly  exhausted.  Shippers  should  know 
also  that  interest  is  charged  on  all  advances  made  on  property  handled 
on  the  Chicago  Board  of  Trade ;  also  the  approved  rate  of  insurance. 


POSTSCRIPT  NOTES. 


HOW  Bid  CONCERNS  KEEP  THEIR  BOOKS. 


I  have  made  a  careful  study  of  the  bookkeeping  methods  in  opei 
ation  in  several  large  concerns  including  the  great  retail  st<  re  of  John 
Wanamaker,  Philadelphia.  I  find  that  the  actual  methods  in  use  and 
the  old  time  methods  taught  in  the  average  business  school  are  as 
widely  different  as  are  the  new  department  stores  of  great  cities  and  the 
general  store  of  a  country  district.  The  tendency  is  along  the  line  of 
labor  saving  devices.  In  Wanamaker' s  store,  for  instance,  where  there 
are  perhaps  six  thousand  clerks,  every  salesman  has  a  pad  of  blank 
forms  upon  which  original  records  are  made.  These  forms  are  so 
printed  and  arranged  that  they  can  be  used  for  almost  any  kind  of  an 
order.  If  the  goods  are  delivered  and  paid  for  at  once,  part  of  the 
slip  goes  with  the  cash  and  finally  to  the  audit  department,  while 
another  part  goes  with  the  goods  and  is  wrapped  up  in  the  parcel.  If 
the  goods  are  paid  for,  but  to  be  delivered,  one  part  of  the  slip  will 
follow  the  goods  to  the  shipping  department,  where  the  particulars  are 
copied  to  the  parcel  clerk's  book  and  checked  off  when  the  parcel  is 
delivered  next  day,  perhaps  at  a  country  house  ten  or  fifteen  miles  out 
of  town.  If  the  goods  are  to  be  delivered  C.  O.  D.  the  same  slips  are 
used,  but  the  entire  slip  is  sent  to  the  C.  O.  D.  department,  where  the 
proper  record  is  made  before  the  goods  are  wrapped  for  shipping.  If 
the  goods  are  to  be  charged  the  same  slips  are  used,  and  records  are 
made  almost  similar  to  those  made  for  the  C.  O.  D.  sales.  All  these 
record  slips  are  finally  collected  and  checked  off  in  the  audit  depart- 
ment. Entries  are  made  in  the  sixty-five  large  credit  ledgers  directly 
from  the  credit  slips,  and  from  these  ledgers  accounts  and  statements 
are  made  out.  The  original  slips  are  all  filed  by  days  and  ledgers  and 
names  so  that  any  particular  slip  of  any  old  date  can  be  looked  up  im- 
mediately when  needed.  This  method  refers  simply  to  the  sales  de- 
partment, and  the  record  is  the  same  no  matter  whether  the  sale  is  a 
spool  of  thread,  a  thousand  dollar  lamp,  or  the  complete  furnishings 
for  a  hundred  thousand  dollar  house. 

Such  a  thing  as  a  journal  is  unknown  in  the  best  houses  and  only 
business  college  trained  bookkeepers  understand  what  is  meant  by  the 
antiquated  system  called  journalizing. 

The  object  of  bookkeeping  in  any  establishment  is  primarily  to 
know  the  proprietor's  financial  condition — what  he  owes,  what  he  owns, 
what  is  due  him.  If  goods  are  sold  the  record  should  show  (i)  that 
the  goods  are  actually  delivered,  £2)  that  the  correct  charge  is  made 


306  POSTSCRIPT   NOTES. 


against  the  buyer,  (.3)  that  he  receives  proper  credit  when  the  account 
is  paid.  Modern  bookkeeping  is  trying  to  reach  these  ends  in  the 
shortest  possible  way  and  with  the  least  expenditure  of  time  and  labor. 

The    Preparation    of  Accounts    for    the    Court. 

•The  first  thing  an  administrator  has  to  do  is  to  file  an  inventory 
which  should  include  the  personal  assets  of  the  decedent.  A  life 
insurance  policy,  for  instance,  in  favor  of  a  man's  wife  should  not  be 
included  in  his  estate;  the  proceeds  belong  to  the  wife  exclusive  of  all 
creditors.  Rents  should  not  be  introduced  into  the  administrator's  in- 
ventory. Although  rents,  when  collected,  are  personal  estate,  yet  if  a 
man  dies  intestate,  and  there  are  rents  due  him  uncollected  they  go  to 
his  heirs.  An  executor  differs  from  an  administrator  in  that  he  derives 
his  power  from  the  will.  The  administrator  has  his  authority  from  the 
law,  which  appoints  him,  the  decedent  having  died  intestate;  the 
executor  has  his  authority  from  the  will,  which  has  made  him  executor. 
An  executor  does  not  usually  have  to  give  security;  such  is  not  the  case 
with  an  administrator.  The  function  of  an  administrator  is  to  collect 
and  distribute;  the  function  of  a  trustee  is  to  hold.  It  isn't  a  good 
plan  to  make  any  distribution  before  the  court  orders  you  to  do  so.  If 
you  do  pay,  you  should  secure  yourself  by  taking  refunding  bonds.  If 
you  should  pay  a  creditor  in  full  and  the  estate  fails  to  produce  enough 
to  pay  all  in  full,  you  are  liable  to  the  other  creditors  for  the  amount 
paid  over  and  above  his  pro  rata  share.  You  must  remember  also  that 
the  widow  is  entitled  to  her  exemption  of  $300,  or  whatever  the  law 
grants,  in  advance  even  of  the  undertaker  or  of  the  doctor.  The  chil- 
dren are  entitled  to  an  exemption,  in  the  absence  of  a  widow,  whether 
they  are  minors  or  not,  if  they  are  dependent. 


BOOK-KEEPING 


It  is  much  more  important  to  learn  the  principles  that  govern  cor- 
rect systems  of  bookkeeping,  than  it  is  to  learn  any  particular  form 
according  to  which  books  should  be  laid  out.  An  intelligent  yotJng 
business  man  may  learn  bookkeeping  by  acquiring  the  fundamental 
principles  of  scientific  accounting,  and  draw  up  his  own  forms  in  ac- 
cordance with  those  principles.  For  this  reason,  a  knowledge  of  the 
principles  and  methods  that  are  used  by  the  best  bookkeepers  in  any 
business  will  enable  any  one  to  vary  the  forms  so  as  to  apply  them  to 
any  other  business.  In  general,  those  forms  are  best  which  (i)  require 
the  least  copying,  (2)  the  fewest  entries,  (3)  the  least  ruling;  (4)  which 
require  the  books  of  original  entry  to  be  posted  directly  to  the  ledger, 
and  (5)  in  which  the  journalizing  is  done  by  means  of  ruled  columns. 
(6)  The  best  forms  also  should  facilitate,  as  much  as  possible,  taking 
balances  and  ascertaining  losses  and  gains.  If  the  intelligent  book- 
keeper criticises  his  forms  on  these  six  lines  and  finds  them  satisfactory, 
while  they  show  all  the  results  that  the  proprietors  wish  to  ascertain,  he 
may  be  satisfied  with  his  work.  The  following  special  points  are  worth 
noting : 

Renewed    Notes. 

When  a  note  is  renewed  the  best  way  to  record  it  is  simply  to  make 
the  memorandum  in  the  bill-book,  marking  out  the  old  and  entering 
the  new.  If  something  is  paid  on  the  note,  a  journal  memorandum 
may  be  made,  or  if  the  note  has  been  discounted  by  us,  and  we  are 
obliged  to  take  it  up,  the  complete  entries  had  best  be  made. 

Branch    Houses. 

The  books  of  branch  houses  should  be  kept  the  same  as  though 
the  branch  were  independent,  excepting  that  the  parent  house  is  credited 
with  the  net  investment.  When  closing  the  books  debit  or  credit  the 
parent  house  with  the  net  loss  or  the  net  gain.  Daily  reports  should  be 
required. 

[307] 


308  MODERN   BOOKKEEPING   IDEAS. 

Trial    Balance    Errors. 

If  the  difference  is  in  round  numbers,  as  $100  or  $10,000,  the 
error  is  likely  one  of  addition.  If  the  difference  is  divided  by  9,  the 
error  may  be  caused  by  the  transposition  of  figures,  as  72  for  27.  If 
the  difference  is  divided  by  2,  the  error  may  have  arisen  from  posting 
an  item  representing  just  one- half  the  difference  to  the  wrong  side. 

Change    of  Bookkeepers. 

In  taking  a  set  of  books  from  another  bookkeeper,  begin  by  taking 
a  trial  balance  to  ascertain  whether  or  not  the  books  balance.  They 
mitst  balance  before  you  can  proceed. 

C.    O.   D.   Sales. 

When  we  ship  goods  C.  O.  D.,  or  ship  them  and  draw  at  sight  as 
soon  as  they  are  shipped,  we  charge  the  person  to  whom  shipped  in  a 
special  C.  O.  D.  book,  and  credit  him  when  the  money  is  received. 

Price    Book. 

The  wholesale  dealer  uses  a  price-book  in  about  the  same  way  that 
a  manufacturer  would  use  a  cost-book.  The  illustration  given  in  this 
chapter  is  taken  from  a  book  in  use  by  a  wholesale  hardware  merchant. 
The  book  should  be  alphabetically  indexed  and  the  articles  entered 
alphabetically.  Pocket  size  price-books  are  manufactured  for  the  use 
of  salesmen.  In  these  the  cost  and  selling  prices  are  expressed  in  letters 
or  other  marks. 

Customers'    Accounts. 

The  new  form  of  retail  ledger  shown  on  page  323  is  being  used 
quite  generally  by  some  western  houses.  It  has  some  advantages.  The 
space  at  the  right  gives  opportunity  for  entering  records  of  the  cus- 
tomer's credit.  Under  \.\\Q  folio  heading  is  entered  the  page  or  number 
of  other  records  giving  the  particulars  of  the  debit  or  credit.  The  ac- 
count can  be  kept  in  compact  form  and  is  easily  checked  off. 

Merchandise    Stock    Register. 

Many  large  concerns  keep  a  stock  register  for  each  department. 
Such  a  register  will  show  the  daily  condition  of  the  stock.  Note  the 
illustration  given  on  page  320.  A  similar  register  is  kept  by  large 
furniture  dealers  showing  at  the  end  of  each  day  the  exact  number  of 
pieces  of  each  particular  kind  of  furniture  remaining  on  hand. 


MODERN   BOOKKEEPING   IDEAS.  309 

Purchase    Journals. 

For  manufacturing  concerns  (page  321)  contain  special  columns 
for  the  various  kinds  of  raw  material  used  in  the  factory,  and  for  the 
principal  sources  of  outlay  or  expense  in  conducting  the  business. 
The  number  of  columns  will  depend  largely  upon  the  character  of  the 
business. 

Wanamaker    Credit   Ledger. 

The  style  of  credit  ledger  in  use  in  one  of  the  largest  department 
stores  in  the  country  is  shown  on  page  314.  Notice  that  there  are  two 
columns  for  the  items  to  be  charged  and  one  column  for  the  credits. 
The  complete  items  are  entered  and  the  bills  are  made  out  directly  from 
the  ledgers. 

Daily    Cash    Balance    Book. 

In  a  large  concern  it  is  not  convenient  to  balance  the  cash  in  th~ 
cash  book  and  a  special  book  is  necessary.  The  form  on  page  315 
shows  the  ruling  of  a  cash  balance  book  in  use  in  a  Philadelphia  house. 
The  gross  cash  items  are  brought  from  other  books,  including  the  bank 
book  and  check  book,  and  are  entered  in  this  book  at  the  close  of  each 
day. 

Instalment    Accounts. 

Within  a  few  years  a  very  large  number  of  concerns  have  engaged 
in  what  is  known  as  "selling  on  instalments."  The  property  appar- 
ently sold,  whether  it  be  worth  $1.00  or  $1000.00,  is  simply  leased, 
with  the  understanding  that  the  weekly  or  monthly  payments  of  rent 
are  to  credited  upon  the  general  purchase  price  until  the  entire  amount 
has  been  met.  An  illustration  of  an  instalment  register  is  given  on 
page  317.  The  other  books  necessary  will  depend  largely  upon  the 
general  character  of  the  business. 

Law   Ledger. 

A  new  form  of  ledger  for  lawyers  is  shown  on  page  313.  It  will 
be  readily  understood  by  any  person  familiar  with  law  accounts.  A 
similar  form  of  ledger  could  be  used  by  a  small  manufacturer.  The 
column  heading  "  docket"  could  be  used  for  particulars  of  the  order 
and  the  cost  of  material. 

Mail    Order   Register. 

See  page  316.     No  explanation  is  necessary.     There  are  thousands 


310  MODERN  BOOKKEEPING  IDEAS. 

of  concerns  doing  a  successful  mail- order  business  and  many  large 
retail  houses  find  this  department  of  their  trade  very  profitable. 

Horizontal    Sales    Ledger. 

See  page  319.  For  some  kinds  of  business,  particularly  small 
jobbers,  this  form  of  ledger  is  considered  specially  desirable.  If  con- 
tinued across  the  double-page  so  as  to  represent  a  whole  year,  the  entire 
condition  of  any  account  could  be  seen  at  a  glance. 

Pay   Roll. 

Note  the  pay-roll  form  on  page  322.  The  particular  advantage 
comes  from  the  change  columns.  In  these  columns  are  entered  the  bills 
or  silver  necessary  to  pay  each.  Suppose  the  amount  due  to  be  $22.47. 
Now,  to  pay  this  amount,  we  need  two  $10  bills,  one  $2  bill,  one  25- 
cent  piece,  two  10  cent  pieces,  and  two  i-cent  pieces.  Write  2  in  the 
$10  column,  I  in  the  $2  column,  I  in  the  25-cent  column,  2  in  the 
lo-cent  column,  and  2  in  the  i-cent  column.  Remember  always  to 
take  the  largest  bills  or  coins  possible.  The  check  for  wages  should  be 
written  "Pay  to  the  order  of  Pay  Roll"  and  a  memo,  of  the  actual 
change  needed  should  be  pinned  to  it  or  written  on  the  back.  If  when 
all  the  pay  envelopes  are  filled  the  cash  is  over  or  short  an  error  has 
been  made,  and  some  person  is  receiving  either  too  little  or  too  much. 

Stepladder   Balance    Sheets. 

When  you  see  a  bookkeeper  making  out  an  old  fashioned  step- 
ladder  balance  sheet,  one  of  these  things  laid  out  like  the  maps  of  three 
new  prairie  towns  printed  on  top  of  each  other,  put  him  down  for  a 
back  number.  A  form  of  balance  sheet  is  shown  on  page  324.  It  is 
complete  enough  for  a  railway  of  a  city  and  is  simple  enough  to  be  un- 
derstood by  every  person  having  occasion  to  look  at  it. 

Municipal    Accounts. 

The  books  necessary  and  the  methods  to  be  used  in  keeping  the 
accounts  of  a  city  or  municipality  do  not  differ  except  in  detail  from 
the  books  and  accounts  of  other  corporations. 

General    Information. 

The  value  of  the  goods  can  be  known  only  by  accurate  count  and 
estimation,  and  must  be  clearly  stated  both  at  the  beginning  and  at  the 
end  of  a  term  of  business.  An  inventory  should  be  taken  yearly. 


MODERN   BOOKKEEPING   IDEAS. 


This  should  show  the  goods  on  hand  at  the  beginning  of  the  year,  the 
goods  bought  during  the  year,  and  the  goods  remaining  on  hand.  The 
balance  sheet  should  show  the  resources  and  liabilities  both  at  the 
beginning  and  at  the  end  of  the  year.  It  should  really  be  an  abridged 
history  of  the  business.  Every  business  man  should  know  exactly  what 
his  profits  and  losses  have  been.  Wrong  estimates  are  ruinous,  and 
it  is  better  to  see  the  truth  than  to  continue  an  enterprise  on  a  mistaken 
basis. 

You  should  keep  a  stock  or  capital  account  in  your  ledger. 
This  should  show  the  original  capital  which  you  invested,  and  the  yearly 
additions.  This  account  may  be  opened  under  your  own  name.  Credit 
it  with  the  cash  and  other  resources  invested  and  debit  it  with  you 
liabilities.  Debit  this  account  with  the  sum  total  of  the  moneys  or  goods 
which  you  draw  for  the  business  for  your  private  use.  The  net  loss 
is  also  debited  to  it,  and  the  net  gain  credited. 

Although  the  merchant's  account-books  are  his  private  records, 
they  also  partake  of  the  nature  of  a  trust,  and  should  bear  internal  evi- 
dence of  being  kept  honestly  and  in  good  faith.  They  should  be 
competent  to  bear  the  scrutiny  of  creditors,  if  it  become  expedient  or 
necessary.  If  errors  are  made,  they  should  be  so  corrected  as  to  show 
the  original  error,  and  the  reason  for  its  correction.  Account-books 
should  be  so  plain  and  clear  as  to  be  understood  at  once  by  a  stranger 
who  sees  them  for  the  first  time,  and  explicit  and  ample  enough  for  the 
guidance  of  an  executor  or  administrator,  in  case  of  the  merchant's 
death. 

The  particular  form  that  one  chooses  for  recording  his  business 
transactions  is  a  matter  of  much  importance.  The  record  should  be  full, 
yet  brief  as  possible;  every  transaction  should  be  so  recorded  that  its 
essential  facts  can  be  found  easily;  the  form  should  be  adopted  to  the 
business.  Don't  make  blind  entries  that  only  yourself  will  understand. 
Be  neat  and  orderly.  Get  into  a  habit  of  doing  things  right.  Don't 
let  small  matters  "  stand  over."  Promptness  is  essential  to  success. 


LAW  LEDGER. 


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324  BALANCE    SHEET. 


THE  BEST  FORM  OF  BALANCE 


Net  Investment 4200 

Net  Gain 2954    18 

Resource! : 

Cash  on  Hand 2000 

Merchandise 9420 

Accounts  Receivable 3682        40 

Bills   Receivable 1024        75 

Real   Estate 3692       45 

Furniture 212        13 

Stocks  and  Bonds 1000 

Liabilities : 

Accounts  Payable 5260    20 

Bills   Payable 6372    10 

Mortgage   Payable 2000 

Other  Liabilities  ...  245    25 


21031    73  21031    73 


THE  UNIVERSITY  OF  CALIFORNIA  LIBRARY 


